Orient Securities has released a research report indicating that during its Q3 earnings call, Alphabet (GOOGL.US) upwardly revised its 2025 capital expenditure guidance from $85 billion to $91-93 billion, while projecting a substantial increase in 2026 capital expenditure. Factoring in TPU v7 shipment volumes and the per-cabinet value of liquid cooling systems, the firm estimates that Alphabet's server liquid cooling market规模 (scale) will reach approximately RMB 18 billion by 2026, marking a significant surge from 2025 and signaling the onset of rapid growth for this segment. The breakthrough in Alphabet's selection of liquid cooling suppliers is poised to grant domestic vendors greater配套 (supporting) market space, with liquid cooling operations emerging as a potential second growth curve for these suppliers. Key insights from Orient Securities are as follows:
Alphabet's TPU v7 servers are expected to fully transition to liquid cooling as the tech giant accelerates the expansion of its AI computing capacity. During the Q3 earnings call, Alphabet adjusted its 2025 capital expenditure guidance upward from $85 billion to $91-93 billion and anticipates a notable rise in 2026 spending. On the export front, Alphabet's TPUs have achieved breakthroughs: beyond existing clients like Anthropic and Meta, external users now include Apple, SSI, and Cohere, with AI enterprises such as OpenAI and xAI also emerging as potential customers. The upcoming official launch of TPU v7, boasting a thermal design power (TDP) of 980 watts—nearing the limits of air cooling technology—means all subsequent TPU chips from v7 onward will adopt liquid cooling solutions. As Alphabet's TPU shipments and liquid cooling penetration rates climb in 2026, demand for liquid cooling system components is projected to soar.
Alphabet's server liquid cooling market is set for rapid expansion. Considering TPU v7 shipment volumes and the per-cabinet value of liquid cooling systems, Orient Securities estimates the market规模 (size) for Alphabet's server liquid cooling will hit around RMB 18 billion by 2026, a sharp increase from 2025 and indicating the start of fast growth. Additionally, the firm forecasts the total overseas server liquid cooling market to reach RMB 93.478 billion in 2026, with NVIDIA leading the pack at approximately 69.3% market share, followed by Alphabet in second place with around 19.3%.
Alphabet's innovative approach to selecting liquid cooling suppliers is breaking new ground, creating expanded配套 (supporting) opportunities for domestic vendors. Unlike NVIDIA's supplier selection model, Alphabet is expected to directly engage with and certify liquid cooling system and component suppliers to ensure the safety, stability, and reliability of its data centers. These system suppliers will serve as tier-one vendors, directly providing products to Alphabet, while sourcing components from Alphabet-designated part suppliers. Alphabet has outlined four core requirements for suppliers: (1) sufficient production capacity; (2) rapid response and delivery capabilities; (3) reasonable and competitive pricing; and (4) global delivery capabilities. Having announced suppliers for its fifth-generation CDU0.8, Alphabet is transitioning from demonstration suppliers to mass production partners, a process that hinges on capacity readiness, cost control, and product consistency. With the mass production supplier selection still underway, more domestic vendors are expected to pass Alphabet's audits and certifications, thereby entering its liquid cooling supply chain.
Domestic manufacturers are actively forging ahead in the liquid cooling industry chain. Yingweike took the lead in 2021 by launching its Coolinside full-chain liquid cooling solution, positioning itself as one of the domestic firms with the most comprehensive product lines and robust ecological布局 (layout); its UQD products, among others, have been named as ecosystem partners for NVIDIA's Blackwell platform MGX. Beyond Yingweike, Tongfei Co., Shenling Environment, and Gaolan Co. have also successfully implemented and delivered full-stack liquid cooling solutions while aggressively pursuing overseas markets. Domestic suppliers have also made significant strides in components, with companies like Yinlun Co. and Feilong Co. leading the charge. These manufacturers have established presences in core areas such as cold plates, CDUs (including critical components like liquid cooling pumps and heat exchangers), quick connectors, manifolds, and coolants, paving the way for their gradual entry into overseas liquid cooling supply chains.
Investment Recommendations Relevant targets: Yingweike (002837.SZ), Yinlun Co. (002126.SZ), Feilong Co. (002536.SZ), Chuanhuan Technology (300547.SZ), Siquan New Materials (301489.SZ), Xiangxin Technology (002965.SZ), Zhongding Co. (000887.SZ), Sulian Co. (301397.SZ), Gaolan Co. (300499.SZ), Shenling Environment (301018.SZ), Kechuang Xinyuan (300731.SZ), Tongfei Co. (300990.SZ), Hongsheng Co. (603090.SH), and Yidong Electronics (301397.SZ), among others.
Risk提示 (Risk Factors) Potential risks include slower-than-expected expansion of overseas data centers like Alphabet, lower-than-projected liquid cooling penetration rates, delayed overseas expansion by domestic liquid cooling suppliers, intensified market competition, and changes in assumptions that could impact the accuracy of the firm's estimates.
