Western: 2026 is expected to enter a key node of industrialization and mass production of liquid cooling. It is recommended to pay attention to CDU liquid cooling pumps and chillers.

Western reports that as an important component of liquid cooling temperature control systems, there are few companies both domestically and internationally specializing in the development of liquid cooling pumps for IDCs. The construction of AI data centers will also benefit from a primary cooling source. With chip power gradually surpassing the limit of air cooling, and high-power chips from companies like NVIDIA and ASIC gradually being shipped, it is believed that 2026 will be a key point for the industrialization and mass production of liquid cooling. It is recommended to pay attention to key components such as CDU liquid cooling pumps and chillers. Recommended targets include Feilong Auto Components (002536.SZ) and Moon Environment Technology (000811.SZ). Western's main points are as follows: - CDU liquid cooling pumps, as core components on the secondary side, are expected to benefit from the acceleration of AI data center construction. - CDU liquid cooling pumps have a core role in regulating coolant flow and pressure. As the "heart" of a liquid cooling system, the pump drives the coolant through a closed circuit with precise fluid dynamic mechanisms to create an efficient heat exchange circulation system. CDU is the central control of the liquid cooling system, accounting for 30%-40% of the system's value, while the liquid cooling pump, as a core component of CDU, accounts for 35% of its value. Therefore, it is estimated that the market size of liquid cooling systems by NV+Google in 2026 will be between $9.3 to $12.6 billion, corresponding to a market size of $1.139 to $1.544 billion for CDU liquid cooling pumps. Apart from InRow centralized CDUs using Grainger's large pumps, there are few specialized companies developing liquid cooling pumps for IDCs domestically and internationally. Primary cooling source: The "heart" of a liquid cooling system, also benefiting from the acceleration of AI data center construction. - In addition to cooling on the cabinet side, the cold source side is mainly responsible for generating and providing cooling capacity to transfer heat from the cooling medium and ensure it remains at a low temperature to continuously provide cooling for the cabinet side. According to QYresearch data, the revenue scale of cooling units for data centers globally was approximately $105.21 billion in 2024, and by 2031, it is expected to reach nearly $167.33 billion. The refrigeration compressor, which uses refrigerant as the compressed working medium and, together with the condenser, evaporator, and expansion valve (also known as the expansion capillary), forms a refrigeration (heating) system, is the "heart" of the entire refrigeration system, accounting for more than half of the cost of a chiller. Risk Warning: Liquid cooling progress falling short of expectations, macroeconomic risks, underperformance of related targets.