Naughty Flicks

Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenuEaton has set a lofty goal: Don’t just power the world’s hungriest data centers — become the one-stop shop for everything else they need to keep AI servers running smoothly. Enter Boyd Thermal. The electrical equipment giant bought the liquid cooling specialist for $9.5 billion earlier this year to own more crucial technology needed in the AI buildout. For years, hyperscalers like Microsoft and Meta Platforms relied on Eaton’s electrical solutions to feed electricity throughout their data centers and turned to separate vendors to cool them down. By acquiring Boyd, Eaton didn’t just plug a product gap – it has locked down customers on both sides of the power-and-cooling equation. Boyd’s product portfolio is only growing more important. As AI chips become more advanced and power hungry, traditional air cooling techniques used in servers cannot keep up with the heat thrown off. Left unmanaged, that heat can threaten chip performance or damage them all together, and stall the momentum of the AI race entirely. Liquid cooling is the solution, with ample runway still ahead. Bank of America predicts that liquid cooling will be used in 70% of new AI data centers by 2030, up from about 30% in 2026. The deal extends Eaton’s reach into the heart of the server racks in data centers. Historically, its presence began outside the building, with equipment like transformers and switchgear found across the electrical grid, and continued inside its walls. There, Eaton supplies more transformers and switchgear, along with power distribution units and other products that bring electricity to the rows of servers. With Boyd, Eaton has another profitable line of business that allows it to capture more of the spending on each data center. At the same time, tech giants are racing against tight deadlines to outpace peers in the AI arms race while navigating strained power grids and supply chain bottlenecks for essential components like memory chips. Securing both power and thermal solutions from a single provider like Eaton cuts through additional friction, helping hyperscalers get capacity online much faster. “By combining Boyd Thermal’s differentiated liquid-cooling technology and engineering expertise with Eaton’s broad grid-to-chip portfolio, we’re better positioned to help customers simplify infrastructure, accelerate deployment timelines, improve efficiency, and get more value from the power they have available,” Eaton CEO Paulo Ruiz told CNBC in a statement. Jim Cramer has called the deal “fantastic,” praising Ruiz’s move to buy Boyd while spinning off its slower-growing automotive business. The remaining Eaton will have a much sharper focus on the data center. “This new CEO of Eaton is something. I really like him,” Jim said. Ruiz took over for Craig Arnold in June 2025. Wall Street analysts shared Jim’s enthusiasm. “This gives them a leadership position in cooling and liquid cooling, which, with AI chips that run hotter, has become a necessity,” KeyBanc analyst Jeffrey Hammond told CNBC. “It really extends them from just power to cooling, and provides a much more comprehensive offering.” Bernstein analyst Chad Dillard agreed, noting, “This deal gives Eaton the ability to be a one-stop solution provider for data centers.” The Boyd deal has already shown signs of paying off since closing in March. The business contributed $432 million in revenue its first full quarter under Eaton, beating management’s initial expectations for the unit by 20%. One competitive advantage, CEO Ruiz said, is Boyd’s size. As the market leader for liquid cooling, Ruiz said it can scale much quicker and more efficiently than its smaller peers. Eaton’s book of data center business is already brimming. In July, the company said its total U.S. data center backlog reached 307 gigawatts, equivalent to 15 years of capacity at 2025 build rates. That’s been fueled by relentless demand for Eaton’s core Electrical Americas segment, which handles traditional grid-scale power distribution, transformers, and switchgear that often support these data center facilities. The unit posted record revenue and operating profit, alongside 18% organic growth, in the June quarter. Boyd is reported within Eaton’s Electrical Global segment, which grew revenue 44% on a reported basis last quarter. Boyd was responsible for 25 percentage points of that growth. Eaton’s AI exposure, as a percentage of total revenue, is set to grow from here. The company in January announced plans to spin off its Mobility Group, which serves automakers and mining and agricultural equipment makers, into a separate entity in 2027. Management cited its focus on ” secular growth themes” such as the AI-driven data center buildout for their decision. The move will remove a drag on Eaton’s corporate margins and, in the eyes of investors, make the company a cleaner bet on the AI boom. Eaton shares are down more than 10% since closing at an all-time high on Aug. 11, coinciding with a loss of enthusiasm for other AI infrastructure stocks in recent weeks. Fellow Club name GE Vernova , which makes gas turbines used to generate electricity, has dropped about 7% in that same stretch. For the year, Eaton is still up about 28%, outperforming the S & P 500’s nearly 13% advance. Since the launch of ChatGPT in November 2022, Eaton is up about 150% versus the S & P 500’s 90% gain, underscoring the company’s status as an AI winner. ETN YTD mountain Eaton (ETN) year to date performance Still, Eaton does not have the power-and-cooling market all to itself. Rival Vertiv already offers both power management equipment and liquid cooling. Acquiring Boyd wasn’t necessarily about beating the competition, but rather keeping pace with the industry’s evolving needs. By bringing Boyd into the fold, Eaton can keep its hyperscale customers and attempt to prevent them from looking elsewhere as their infrastructure demands grow. Leaning into the AI buildout is also not without risks. Eaton faces broader concerns that all AI-related stocks do. Political pushback is a big, and growing, one . Ahead of the midterm elections, Pennsylvania Democratic Gov. Josh Shapiro signed an executive order in August aimed at controlling data center development in his state. In Texas, Republican Gov. Greg Abbott has also taken steps to restrict development. In June, Abbott issued a directive to the state’s utility and power commissions to “protect residential ratepayers from the costs of data center expansion.” The outcry makes sense to Ramteen Sioshansi, an engineering professor at Carnegie Mellon University, in Pittsburgh, who in an interview described data centers as “resource hogs” for communities as they require large amounts of local power and water. Large data centers can consume up to 5 million gallons of water per day, equivalent to the needs of a town of up to 50,000 residents, according to bipartisan nonprofit Environmental and Energy Study Institute. Concerns about data centers pushing up electricity bills for homeowners is another salient issue. Sioshansi also raised doubts about whether every planned data center facility will actually materialize. “In my mind, the bigger question is how much data center demand is real versus fictitious ghost projects where a developer proposes a project in three or four states, but realistically might build one,” said Sioshansi, whose research focuses on renewable energy and the integration of advanced energy technologies. He was previously on the Electricity Advisory Committee, a federal advisory committee to the U.S. Secretary of Energy. Eaton’s management team has expressed confidence in its long-term outlook. CEO Ruiz has forecasted double-digit growth for the data center end-market in 2026, and on the company’s July earnings call, he backed its 2030 financial targets , which include compound annual earnings growth above 12%. While Jim has expressed concerns about the data center trade in the run-up to the November elections, he hasn’t backed away from his belief that AI represents the fourth industrial revolution, with immense promise for the economy and the companies supplying the equipment that enables it. Wall Street analysts view Eaton’s long-term prospects similarly to us. “We’re still of the view that it’s a good place to be, and it’s still got a number of years of significant growth that’s going to drive earnings upside,” KeyBanc’s Hammond added. “A year from now, I think the earnings power of those companies is a lot higher, and that makes the stocks work.” By selling both the power supply and the cooling systems, Eaton ensures that as long as the AI boom keeps humming along, it reaps the rewards on both sides. (Jim Cramer’s Charitable Trust is long ETN, MSFT, META and GEV. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.Read More