Key Takeaways
- Representatives from Google’s procurement division traveled to China recently to engage with liquid cooling equipment manufacturers, with Envicool among the companies visited
- Global availability of liquid cooling components has grown constrained amid rapid AI data center expansion
- Market analysts forecast the AI server liquid cooling sector will surge to $17 billion by 2026, nearly doubling from $8.9 billion in 2025
- At an industry conference, Envicool demonstrated a coolant distribution unit designed according to Google’s specifications
- According to Goldman Sachs analysis, Envicool anticipates sequential quarterly revenue increases in liquid cooling, with possible Google contracts under consideration
Alphabet’s Google is turning its attention to Chinese manufacturers to address a critical infrastructure challenge. A procurement delegation from the tech giant’s Taiwan-based operations made the journey to China within the past month to explore partnerships with liquid cooling system providers for its expanding data center network.
According to two individuals with knowledge of the meetings, the Google team engaged with Envicool, a Shenzhen-headquartered cooling technology company. A third source indicated the delegation has scheduled meetings with at least one additional supplier. Both Google and Envicool declined to provide statements when contacted.
Liquid cooling technology works by channeling water or specialized fluids directly onto or around computing equipment. Within AI-focused data centers, where processors operate at extreme densities and generate substantial heat, traditional air-based cooling methods have proven inadequate.
This procurement initiative underscores the supply chain pressures affecting the entire data center ecosystem — extending beyond high-end semiconductors to encompass supporting infrastructure like thermal management components.
Explosive Market Expansion
The worldwide AI server liquid cooling market is on track for dramatic expansion, with projections showing growth from $8.9 billion in 2025 to surpass $17 billion by 2026. JPMorgan’s analysis attributes this trajectory to deployment demands from Nvidia and major cloud infrastructure providers implementing proprietary AI processors.
Envicool, established in 2005 and currently commanding a valuation near $14 billion, reported revenue growth of 40% across the initial three quarters of last year. During a recent trade exhibition, the firm showcased a coolant distribution unit (CDU) — the critical component responsible for circulating coolant throughout server arrays — engineered specifically to meet Google’s requirements.
A Goldman Sachs research note, published following a discussion with Envicool representatives this month, indicated the company anticipates continued quarter-over-quarter liquid cooling revenue expansion throughout the year. The report mentioned that orders for fifth-generation CDUs from Google remain under active consideration.
Envicool’s growth strategy includes significant capacity expansion. The company has announced plans for a manufacturing facility in Guangdong province, with additional production sites under development in Thailand and on U.S. soil.
China’s Rising Position in Cooling Technology
Chinese manufacturers have established increasingly prominent positions within the liquid cooling sector, propelled by robust domestic market conditions. Extensive data center construction projects within China have enabled these suppliers to achieve production scale and competitive pricing advantages.
Notable competitors include Lingyi iTech and Feilong Auto Components, alongside established server manufacturers such as Lenovo. The overall market remains highly distributed, with numerous vendors specializing in distinct components of comprehensive cooling solutions.
Taiwanese companies continue serving as primary suppliers for Google throughout the Asian region. Foxconn, Auras, and Delta Asia all maintain existing relationships providing cooling hardware. Chinese manufacturers appear positioned to capture incremental demand as supply constraints intensify.
Additional Chinese technology vendors capitalizing on AI infrastructure investment include optical transceiver producers Innolight and Eoptolink. Printed circuit board specialists such as Victory Giant Technology count both Nvidia and Google among their customer base.
Wall Street’s consensus view on GOOGL stock currently stands at Strong Buy, reflecting 26 Buy recommendations and six Hold ratings issued over the most recent three-month period. The consensus price target of $376.57 suggests approximately 23% appreciation potential from present trading levels.
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