Modine Manufacturing

Modine's overall revenue grew 7.3% over the past year, with data center cooling now the fastest-growing slice of the business and leading the pivot away from low-growth auto parts. Investors have noticed: the market cap has climbed to roughly 15.6 billion dollars as the AI thermal story has played out. Management is steadily building factory capacity to keep up with hyperscaler demand for liquid cooling and air handlers.

Net margins sit at just 3.82% today as Modine spends heavily on US factory expansion. But here's the payoff: management is guiding for gross margins to push toward 30% once those new facilities ramp, compared to roughly 23% today. As the high-margin data center mix grows, every extra dollar of revenue should drop more profit to the bottom line.

NVIDIA's next-generation Rubin chips are being designed to need less cooling per unit, which sparked a 14% selloff in the stock earlier this year. With net margins at just 3.82%, Modine has a thin cushion if cooling demand softens or chip makers continue engineering heat down. The whole bull thesis depends on AI heat output staying high.

At a market cap near 15.6 billion dollars and trading around 30 times forward earnings, the stock is priced for flawless execution on the factory ramp. Vertiv remains the clear leader in data center cooling with higher margins, better returns on capital, and a meaningful head start. Any stumble during Modine's expansion phase could trigger a sharp pullback.