One AI data center can need hundreds of chillers, the giant cooling units that keep servers from overheating. Carrier Global (CARR) says it can't build them fast enough. So it plans to spend more than $600 million on a new plant in Fort Worth, Texas. It's the biggest investment in the company's history.
“We cannot keep up without building this additional facility,” CEO Dave Gitlin said in the Journal's story by Bob Tita. Carrier expects about $2 billion of data-center equipment sales this year. That would double its data-center sales for the second year in a row. The plant will top 1 million square feet and bring 1,500 manufacturing and engineering jobs. It should more than double Carrier's capacity for big commercial chillers, compared with its plants in North Carolina and Mexico. Three or four chiller lines are due to start by late next summer. In time, the plant is meant to turn out 3,000 air-cooled chillers a year. Gitlin says that's enough to cool a million homes. AI chips throw off heat, and a data center crams thousands of servers close together.
Real estate joins the tech cycle
On Wednesday, Oct. 21, the Journal's Peter Grant reported that the property giant CBRE is buying London-based Onnec Group. It'll pay about $610 million in cash, plus up to $400 million more if growth targets are met. Onnec's 800 workers install cabling and racks inside data centers. CBRE says data-center capacity in eight big U.S. markets grew nearly 34% in the year to June 30. Only 1.4% sat empty. CEO Bob Sulentic still calls the industry “extremely frothy.” CBRE's push cuts against an old idea. Property was supposed to be the part of a portfolio that didn't care about tech. For firms like CBRE, that's getting less true.
Thursday, Oct. 22, showed the other side. In the AI selloff, cooling maker Vertiv (VRT) fell $16.56 to $195.59, about 8%. Trane Technologies (TT) and Johnson Controls (JCI) each fell about 5%. Carrier closed at $56.48, up a penny.
Our read
This is an Investments/Risk IN04 story about the build-out's plumbing. Chips get the headlines. Chillers, cables and racks get the orders. When the AI trade sells off, these suppliers can fall right along with the chip makers, as Thursday showed. Record orders are good news for a company. They don't protect its stock on a bad day for the theme. Vertiv is held at weight in 20 books, with nothing added. Carrier, Trane, Johnson Controls and CBRE aren't held. Our verdict is watch.
Here's where it touches your plan. Many people own a real estate fund or an industrials fund to spread their risk away from tech. This week, open the top ten holdings of any such fund you own. Look for data-center owners, cooling makers and the firms chasing data-center fees. If they sit near the top, part of your diversifier rides the same AI cycle as your tech fund. Gutters are easier to clear on a dry afternoon. If what you find surprises you, bring the list to a review.