Microsoft on Tuesday revealed what it called "breakthrough" technology for cooling AI chips in data centers using microfluidics. Vertiv stock fell on the news as the data center infrastructure provider is a leader in liquid cooling.
"In the face of rising demand for AI and newer chip designs, the current cooling technology will put a ceiling on progress in just a few years," Microsoft said in a blog post. "To help address this problem, Microsoft has successfully tested a new cooling system that removed heat up to three times better than cold plates, an advanced cooling technology commonly used today."
Microsoft's approach uses microfluidics to bring liquid coolant directly inside the silicon where the heat is. "Tiny channels are etched directly on the back of the silicon chip, creating grooves that allow cooling liquid to flow directly onto the chip and more efficiently remove heat," Microsoft said.
Most graphics processing units for AI computing in data centers today use cold plates to cool the chips, But those plates are limited in the amount of heat they can remove because they are separated from the heat source by several layers, Microsoft said.
Microsoft said it hopes to use microfluidics for next-generation AI chips, but it gave no timeline for implementing the technology. Microsoft designs custom chips for its operations, including Cobalt and Maia processors.
Vertiv Stock Retreats On News
"As a next step, Microsoft continues to investigate how microfluidic cooling can be incorporated into future generations of its first-party chips," the company said. "It will also continue to work with fabrication and silicon partners to bring microfluidics into production across its datacenters."
On the stock market today, Vertiv stock dropped 6.2% to close at 142.61. Microsoft stock dipped 1% to 509.23.
Vertiv's positioning in the data center market is safe, Evercore ISI analyst Amit Daryanani said in a client note.
"From our understanding, Microsoft's microfluidics is pushing more towards integrating cooling within the silicon itself rather than Vertiv's focus of system-level thermal management," Daryanani said. "Finally, while hyperscalers like Microsoft (and AWS, in its July announcement) increasingly seek to own their IP (intellectual property), we think Vertiv remains a crucial partner in developing, supplying, and deploying these solutions at scale."
Daryanani reiterated his outperform rating on Vertiv stock with a price target of 165.
Vertiv stock is on three IBD lists: IBD 50, Big Cap 20 and Leaderboard. Microsoft stock is on two lists: Long-Term Leaders and Tech Leaders.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
