Powering AI: Demystifying Data Center Cooling & Water Use

Research evidence excerpt

Powering AI: Demystifying Data Center Cooling & Water Use

Equity Research

13 May 2026

Thematic Investing

Powering AI: Demystifying Data SIGNATURE

Center Cooling & Water Use

Cooling is critical to data center operations, and its water use

is increasingly under scrutiny. Yet, we sense a lot of investor William Thompson

confusion. This report demystifies cooling technologies and +1 212 526 8641 william.s.thompson@barclays.com

their water-energy trade-offs, debunks common myths, and BCI, US

maps the evolving equipment supplier ecosystem. Hannah Greenberg

+1 212 526 2457

hannah.greenberg@barclays.com

As data centers heat up, cooling—and its water use—becomes critical. While power often BCI, US

dominates the DC discussion, cooling is also critical, particularly as server rack power densities

rise and water use comes under scrutiny. Last week, a "thermal event" disrupted an AWS data U.S. Multi-Industry

Julian Mitchellcenter.1 Despite this, we sense investor confusion on cooling technologies and the electricity-

+1 212 526 1661

water use trade-offs. With broad implications, we: (i) analyze the trade-off between electricity julian.mitchell@barclays.com

efficiency and water intensity; (ii) demystify DC cooling technologies; (iii) address common BCI, US

investor misconceptions; (iv) highlight potential for continued tech disruption; (v) detail

potential labor constraint implications; (vi) map out the DC cooling supplier ecosystem; and (vii) European Capital Goods

provide sector-level perspectives. George Featherstone, CFA

+44 (0)20 3555 8585

FIGURE 1. Liquid cooling + water-cooled chiller + wet cooling tower system illustration george.featherstone@barclays.com

Warm Vapor (Water loss) Barclays, UK

Vlad Sergievskii

Warm Water Warm Water Warm Water +44 (0)20 7116 1117