Veralto's ChemTreat Partners With Dow on Data Center Cooling
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
veraltochemtreat
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Veralto Corporation's water quality segment, ChemTreat, announced a strategic partnership with Dow Inc. on June 19, 2026, to co-develop advanced chemistry solutions for data center liquid-cooling systems. The collaboration directly targets the rapidly expanding thermal management market, driven by soaring energy demands from artificial intelligence workloads and high-performance computing. This initiative aims to enhance the reliability and efficiency of critical infrastructure cooling, a pivotal concern for major cloud service providers and hyperscalers.
Data center energy consumption is projected to double by 2026, with AI workloads contributing significantly to this surge. The shift to liquid cooling from traditional air-based systems is accelerating as chip densities outpace the thermal dissipation capabilities of existing infrastructure. This creates a substantial addressable market for specialized chemical treatments that prevent corrosion, microbial growth, and scaling in closed-loop systems.
The last major innovation cycle in industrial cooling fluids occurred in 2022 when 3M exited the market, creating a supply gap for specialized formulations. Current macro conditions favor infrastructure investments, with the 10-year Treasury yield at 4.31% providing a stable backdrop for capital expenditure planning. The partnership was triggered by escalating demand signals from North American hyperscale data center operators facing cooling capacity constraints.
The global data center liquid cooling market was valued at $2.7 billion in 2023 and is forecast to reach $12.5 billion by 2028, representing a compound annual growth rate of 35.9%. Veralto's water quality segment, which includes ChemTreat, reported $1.48 billion in revenue for fiscal year 2025. Dow's Performance Materials & Coatings segment generated $12.3 billion in revenue in 2025.
Thermal management represents approximately 40% of total data center energy consumption. Advanced liquid cooling can reduce this energy usage by 30-50% compared to conventional air cooling systems. The partnership aims to capture a mid-single-digit percentage of the total liquid cooling solutions market within three years. Veralto shares (VLTO) have gained 14.2% year-to-date, outperforming the S&P 500's 8.7% gain over the same period.
| Metric | Before Partnership | Target After 3 Years |
|---|---|---|
| Market Share | <1% | ~5% |
| Addressable Market | $2.7B | $12.5B |
The partnership strengthens Veralto's positioning in the high-growth data center infrastructure sector, potentially adding $200-300 million in incremental revenue by 2029. Primary beneficiaries include equipment manufacturers like Vertiv Holdings (VRT) and Schneider Electric (SU), which require reliable fluid chemistry for their cooling systems. Semiconductor manufacturers, particularly NVIDIA (NVDA) and Advanced Micro Devices (AMD), benefit from more efficient thermal solutions enabling higher processor densities.
A counter-argument suggests that adoption rates might slow if economic conditions deteriorate and data center operators delay capital expenditures. The specialized nature of cooling fluids also faces competition from in-house development by large technology companies. Institutional flow data indicates increased positioning in water treatment and industrial chemical names, with net inflows of $120 million to the sector over the past quarter. Short interest in VLTO remains low at 1.2% of float, suggesting limited skepticism about this strategic direction.
Veralto's Q2 2026 earnings call on July 24 will provide the first opportunity for management to quantify the financial impact of the Dow partnership. Market participants should monitor adoption rates through channel checks with data center operators like Equinix (EQIX) and Digital Realty Trust (DLR). The DOE's next data on energy consumption trends, due August 15, will provide crucial validation of cooling efficiency claims.
Key technical levels for VLTO include support at $88.50, its 50-day moving average, and resistance at $95.00, near its 52-week high. Sector rotation into infrastructure plays could accelerate if 10-year Treasury yields remain below 4.5%. The partnership's success depends on securing design wins with at least two major hyperscalers by year-end 2026.
Data center cooling fluids require extremely high purity standards and specialized additives to prevent electrical conductivity and maintain thermal transfer properties. Unlike municipal or industrial water treatment, these closed-loop systems demand chemicals that prevent corrosion on copper and aluminum components while operating at elevated temperatures. The formulations must also be environmentally safe in case of leakage and compatible with various metals used in heat exchangers.
Veralto's ChemTreat business historically focused on industrial water treatment for manufacturing, power generation, and commercial facilities. This partnership represents its first dedicated push into the data center cooling market, which could grow to represent 15-20% of ChemTreat's revenue within five years. The collaboration leverages Dow's materials science expertise in creating base fluids while utilizing ChemTreat's knowledge of additive packages and monitoring systems.
Direct competitors include specialty chemical firms like Ecolab (ECL) and Brenntag (BNTG), though neither has announced a dedicated data center cooling program. Equipment-focused companies like Vertiv (VRT) and Schneider Electric (SU) offer complete cooling systems but typically source chemistry from partners. Large cloud providers including Amazon Web Services, Microsoft Azure, and Google Cloud are developing proprietary cooling technologies that could eventually compete with third-party solutions.
Veralto's Dow partnership positions it to capture share in the high-growth data center thermal management market.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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