One type of technology is becoming essential to support Nvidia and other tech giants’ artificial intelligence server requirements, according to Japanese bank Nomura. That’s liquid cooling, a cooling technology used in data centers which helps to improve power and cost efficiency. The type of cooling used to date has been air cooling, but companies are starting to look for other options, according to Nomura. “As air cooling is approaching the limit of its cooling capacity, the importance of liquid cooling is getting increasingly more pronounced … liquid cooling [is] becoming a must-have for GB200,” said the bank. The GB200 is Nvidia’s next-generation AI graphics processor, due to ship later this year. Nomura estimates the liquid cooling penetration rate in Nvidia’s AI servers is set to rise from 8% in 2024 to 43% in 2025, and 47% in 2026. Tech companies have been capitalizing on the AI boom, driving the development of products and services in that area. It also means that AI data centers are growing fast — as is demand for them. Data centers house the vast amounts of computing power needed for AI workloads. Liquid cooling systems are the solution to “power shortage pressures” in data centers, Morgan Stanley said in a previous report . Such systems save between 10% and 15% in capital expenditure, it had said. Against that backdrop, Jefferies is bullish on four Asian stocks it says will be “key beneficiaries” of the liquid cooling trend. AVC: Jefferies says AVC should have at least 50% market share in top cloud service providers’ cold plate orders for Nvidia’s G200. Cold plates are a component that transfers heat from the device that dissipates it in another cooling system. It gave the stock a price target of 743 Taiwan dollars ($23.20), implying about 30% upside. Auras: Auras supplies cold plates to Super Micro Computer , which has been another hot beneficiary of the AI boom. The Taiwan-based company is also an “enabler” for electronics firm Quanta’s CDU (coolant distribution unit) for tech giant Meta , Jefferies noted. It gave the stock a price target of 797 Taiwan dollars, implying around 25% upside. Delta: Taiwanese firm Delta is likely to gain market share for liquid cooling content for tech giants including Microsoft , Meta and Amazon Web Services, said Jefferies. It gave the stock a price target of 490 Taiwan dollars, implying about 25% upside. Nidec: Japanese firm Nidec is a key provider of coolant distribution units to Super Micro Computer and Jefferies says it’s driving this business “aggressively.” It gave the stock a price target of 9,000 Japanese yen ($62.6), implying around 53% upside. — CNBC’s Michael Bloom contributed to this report.