Refuting the 'AI Bubble' Narrative! UBS: Data Center Expansion Shows No Signs of Cooling—Raises 2025 Market Growth Forecast to 20–25%

According to the latest monitoring data from UBS Evidence Lab, global data center capacity is undergoing rapid expansion, with 25 GW currently under construction and approximately 105 GW already operational. Analyst Andre Kukhnin’s team noted in its report that, factoring in the conversion of projects under construction into actual capacity—and sustained high capital expenditures by hyperscale cloud providers—the industry is poised to achieve ~25–30% growth in 2025, with strong momentum extending into 2026. Buoyed by robust pipeline data and exceptionally low vacancy rates, UBS has raised its medium-term growth outlook for the sector, forecasting 20–25% annual growth in 2026 for the broader market—including power, cooling, and IT infrastructure. This optimistic forecast directly counters recent market concerns about an 'AI bubble.' UBS emphasizes that adoption of generative AI (GenAI) is growing exponentially. Although monetization remains in its early stages, tangible returns are already materializing—evidenced by $17 billion in annualized recurring revenue (ARR). Deeper technology integration, coupled with shorter AI server lifecycles driving replacement demand, underpins long-term industry vitality. Growth forecast revised upward—with liquid cooling leading the way UBS’s latest report updates core assumptions for the global data center equipment market. The bank expects market growth of 25–30% in 2025, followed by 20–25% in 2026, 15–20% in 2027, and a steady 10–15% compound annual growth rate (CAGR) from 2028 through 2030. This confidence stems from cross-validated data. UBS analysis shows persistently low data center vacancy rates across major regions: 1.8% in North America, 3.6% in Europe, and 5.8% in Asia-Pacific—indicating clear supply-demand imbalance. Meanwhile, UBS Evidence Lab’s pipeline data suggests that even without new projects, the CAGR for 2025–2029 would reach 21%, assuming all planned capacity comes online as scheduled by 2029. Among subsegments, the cooling market stands out most prominently. As AI chip power density surges, UBS forecasts the cooling segment will maintain a ~20% CAGR through 2030—with liquid cooling growing at 45%, making it the fastest-growing niche.

Profit of ¥30 Billion in Three Years—KKR Is Exiting Again

Originally published by 'China Private Equity' (ID: PE-China) Author: Wei Yajun Photography: Bob KKR (including co-investors) achieved a three-year paper return exceeding 17x. A textbook-perfect exit. Recently, Ecolab Inc.—a global leader in water treatment and sustainability solutions—announced its agreement to acquire CoolIT Systems, a developer of data center liquid cooling systems, for approximately USD 4.75 billion in cash (roughly RMB 32.8 billion). CoolIT Systems is currently majority-owned by funds managed by KKR. In May 2023, KKR—alongside co-investors—acquired a majority stake in CoolIT Systems for approximately USD 270 million. The transaction is expected to close in Q3 2026. An expensive acquisition Valuation far exceeds traditional industrial benchmarks From a deal-terms perspective, this acquisition carries a notably 'expensive' valuation. Reportedly, the USD 4.75 billion price tag represents 29x CoolIT’s projected adjusted EBITDA for the next 12 months—and 24x its projected adjusted EBITDA for fiscal year 2027. Such multiples vastly exceed typical valuations seen in traditional industrial M&A. Clearly, this elevated valuation reflects the extraordinary fervor surrounding the AI infrastructure sector: as global tech giants race to build data centers to secure computing power, thermal management has become a critical physical bottleneck constraining AI advancement. Per Ecolab’s disclosures, CoolIT is projected to generate approximately USD 550 million in sales over the next 12 months, with an adjusted EBITDA margin of roughly 30%. This implies Ecolab paid over 8.6x price-to-sales (P/S) for a company generating ~USD 550 million in annual revenue. For comparison, Ecolab’s own market capitalization stands at ~USD 77.7 billion, with projected 2025 revenue of ~USD 16.08 billion—implying a P/S ratio of only ~4.8x. Post-acquisition, Ecolab’s addressable market (TAM) will double—from USD 5 billion to USD 10 billion—with the market expanding at double-digit annual rates. Ecolab estimates that in the first year following the acquisition, organic sales growth for its global water business will increase by two percentage points, and overall organic sales growth will rise by one percentage point. Starting in 2028—excluding non-cash amortization costs—the deal is expected to accrete to adjusted earnings per share. To finance the acquisition, Ecolab will raise new transaction debt. From gaming enthusiast to liquid-cooling leader Public records show CoolIT Systems was founded in 2001 and is headquartered in Calgary, Canada. Founders Brydon Gierl, Sandy Scott, and Jason Myers conceived the idea of revolutionizing computer cooling amid Calgary’s vibrant startup ecosystem. According to company history, Sandy—a passionate gamer—was frustrated by overheating graphics cards severely degrading his PC gaming experience. He approached Brydon for help, and the two began early experiments on a kitchen table, seeking to solve this pain point for high-performance computing users.

UBS reiterates Ecolab stock rating on datacenter growth outlook

1 day ago

UBS reiterated a Buy rating on Ecolab with a $344 price target, anticipating strong earnings growth through 2027 driven by its CoolIT segment and datacenter demand following a Q2 earnings beat.

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