Wells Fargo Upgrades Ecolab as AI Cooling Opportunity Expands

Wells Fargo upgraded Ecolab to overweight from equal weight Friday and raised its price target to $380 from $315, citing opportunities for the company's cooling and water services as data-center construction and chipmaking expand.

Wells Fargo analyst Jason Haas said Ecolab's cooling business can serve new data-center builds and existing facilities that convert to direct-to-chip systems. The approach uses liquid cooling at the chips. Haas said opportunities are growing as computing racks become denser.

Ecolab acquired CoolIT Systems in July for nearly $5 billion, adding direct-to-chip liquid-cooling technology to its business. Haas estimated that less than 20% of the market has been penetrated.

Chip manufacturing is another part of the opportunity. Haas said roughly 70 new semiconductor fabrication plants, or fabs, are expected by 2030. He projected semiconductor water demand to increase more than 600% by 2050.

Ecolab's recent acquisition of Ovivo's Ultra-Pure Water business extends its offerings to water used in chip production. Haas said the business also gives Ecolab services across a fab's lifecycle.

U.S. data centers used 66 billion liters of water in 2023.