Dell’s 2025 Liquid Cooling Strategy: Dominating the AI Data Center Market

Industry Adoption: Dell Technologies’ Pivot to Liquid Cooling for AI Data Centers

Between 2021 and 2024, Dell Technologies executed a foundational pivot, transforming liquid cooling from a niche high-performance computing (HPC) offering into a strategic pillar for its mainstream data center business. This period was defined by preparation and validation, driven by the recognition that escalating AI workloads would make traditional air cooling obsolete. With cooling already accounting for up to 40% of data center energy consumption, Dell focused on building a diverse ecosystem of specialized partners like CoolIT Systems, Submer, JetCool, and ZutaCore. This allowed the company to explore and validate a range of technologies, from direct liquid cooling (DLC) to full immersion. Product launches like the PowerEdge XE9640 and collaborations on self-contained units with JetCool demonstrated a clear intent to prove the technology’s commercial viability, offering quantifiable benefits such as an 18-23% reduction in cooling energy consumption. The strategy was to build capability and establish proof points, positioning Dell to capitalize on the impending thermal crisis in data centers.

The period from January 2025 to the present marks a dramatic inflection point where Dell’s preparatory strategy transitioned into aggressive commercialization and market capture. The narrative shifted from proving efficiency to enabling large-scale, enterprise-ready “AI Factories.” This strategic pivot is validated by staggering financial momentum: AI server shipments hit $8.2 billion in a single quarter (Q2 FY26) with a backlog of $11.7 billion, leading Dell to raise its full-year AI server forecast to $20 billion. The variety of commercial applications expanded from single-server solutions to massive deployments, exemplified by the rapid installation of 110,000 liquid-cooled GPUs for a single client and the expansion deal with AI cloud provider CoreWeave. New product launches like the Dell Integrated Rack 7000 (IR7000), a rack-scale system capable of cooling 480kW, signal that Dell is no longer just selling servers but complete, integrated, and managed thermal ecosystems. This shift addresses a critical market opportunity—the data center liquid cooling market is projected to surge from $4.68 billion in 2025 to $22.57 billion by 2034—while neutralizing the threat from component-focused competitors by offering a holistic, de-risked solution for enterprises.

Table: Dell’s Financial Commitments to its AI and Liquid Cooling Strategy

Table: Dell Technologies’ Strategic Liquid Cooling Partnerships

Geography of Dell Technologies’ Data Center Cooling Strategy

Between 2021 and 2024, Dell’s liquid cooling activities were largely centered in North America, its primary market, and focused on technology development with partners like CoolIT Systems and early deployments with US-based clients. However, early signals of a global strategy emerged, such as the 2022 partnership with PhonePe and NTT to launch a green data center in India, indicating an interest in applying its efficiency-focused technologies to emerging markets. The focus during this period was predominantly on establishing technical leadership and validating solutions within mature markets.

From 2025 onwards, Dell’s geographic strategy has visibly accelerated and expanded, with a pronounced focus on the Asia-Pacific region. This region is a hotbed for digital transformation and AI adoption, making it a critical battleground for infrastructure providers. The $50 million investment in its Singapore AI Innovation Hub serves as a strategic anchor to accelerate AI adoption across APAC. This is further supported by tactical, high-visibility projects like the liquid cooling pilot with Equinix and Schneider Electric in Hong Kong and the launch of the first liquid cooling showroom in the Philippines with Vertiv. These initiatives are not just sales efforts; they are crucial market education and ecosystem-building activities designed to establish liquid cooling as the standard for AI in the region. This targeted expansion shows Dell is proactively cultivating new markets, moving beyond its traditional strongholds to capture growth where the demand for AI-ready data centers is set to explode. Meanwhile, projects like the Horizon Supercomputer at the University of Texas at Austin confirm its continued dominance in large-scale academic and research deployments in the U.S.

Technology Maturity of Dell’s Data Center Liquid Cooling Solutions

In the 2021-2024 period, Dell’s strategy was centered on the commercial validation of a diverse portfolio of liquid cooling technologies. The technology was moving from niche to a commercially viable option. This phase was characterized by partnerships to cover all bases: direct-to-chip (CoolIT), full immersion (Submer, GRC), and novel self-contained systems (JetCool). Products like the PowerEdge XE9640 and the hybrid Liquid Assisted Air Cooling (LAAC) in the XE8640 were commercially available but targeted at early adopters and specific HPC/AI use cases. The maturity level was commercial, but the scale was focused on the server-level, demonstrating that individual high-TDP components could be cooled efficiently. The goal was to prove that different liquid cooling approaches were ready for enterprise environments and to build a catalog of validated options.

Since the beginning of 2025, the technology has rapidly matured from server-level components to fully integrated, rack-scale commercial systems designed for mass deployment. The launch of the Dell Integrated Rack 7000 (IR7000) and the PowerCool Rack-mounted Coolant Distribution Unit (RCDU) marks a significant leap in maturity. These are not just cooled servers; they are complete, managed ecosystems designed to be deployed as a single unit—an “AI Factory.” The technology is no longer an optional add-on but a fundamental design principle of flagship products like the PowerEdge XE9780L, engineered specifically to cool 192 NVIDIA Blackwell GPUs. This tight integration and the ability to deploy 110,000 liquid-cooled GPUs for a client in a matter of weeks validates that the technology has achieved scalable commercial status. The focus has shifted from *if* liquid cooling works to *how quickly* it can be deployed at the scale required by hyperscalers and large enterprises.

Table: SWOT Analysis of Dell’s Data Center Liquid Cooling Strategy

Forward-Looking Insights and Summary

The data from 2025 makes one thing unequivocally clear: Dell Technologies is no longer just a participant in the liquid cooling market; it is actively shaping it. The year ahead will be defined by execution and scale. The most critical signal to watch is the company’s performance against its ambitious $20 billion AI server forecast for FY26. Meeting this target will be the ultimate validation of its integrated “AI Factory” strategy and will solidify its position as a primary enabler of the AI boom. The focus is shifting from technological innovation to supply chain mastery and services enablement.

Market actors should pay close attention to the growth of Dell’s services portfolio, particularly offerings that help enterprises design and retrofit their data centers for liquid cooling. As solutions like the IR7000 become more common, the bottleneck for adoption will move from the server rack to the facility itself. Dell’s ability to simplify this transition for its vast enterprise customer base will be its key differentiator against competitors. Furthermore, expect a deepening of Dell’s partnership ecosystem, with a greater emphasis on co-location providers like Equinix and specialized cloud providers like CoreWeave. These collaborations are essential for making high-density, liquid-cooled AI infrastructure accessible as a service, lowering the barrier to entry for a wider range of customers. Dell is betting that in the AI era, enterprises will buy complete, managed solutions, not just powerful components. The next 12-18 months will reveal if that bet pays off at scale.

Frequently Asked Questions

Why is Dell making such a big push into liquid cooling?
Dell is focusing on liquid cooling because the powerful processors and GPUs required for modern AI workloads generate immense heat that traditional air cooling can no longer manage efficiently. With cooling already representing up to 40% of a data center’s energy consumption, liquid cooling is essential to enable high-density “AI Factories” and achieve significant energy savings.

What does Dell mean by an “AI Factory”?
An “AI Factory” is Dell’s term for a complete, pre-integrated, and managed infrastructure solution designed for large-scale AI. Instead of just selling servers, Dell offers a holistic system combining compute, storage, and networking with rack-scale liquid cooling, like the Dell Integrated Rack 7000 (IR7000). This approach simplifies and de-risks deployment for enterprises by providing a single, supported solution.

How has Dell’s strategy evolved since early 2025?
Before 2025, Dell’s strategy was about preparation—building partnerships and validating various liquid cooling technologies at the server level. Since 2025, the strategy has shifted to aggressive commercialization and market capture. The focus is now on selling fully integrated, rack-scale systems designed for mass deployment, moving from proving the technology works to enabling large-scale enterprise adoption.

Is Dell building its own liquid cooling technology or using partners?
Dell’s strategy relies on a robust ecosystem of specialized partners. By collaborating with leaders in different cooling technologies like CoolIT Systems, ZutaCore, Submer, and JetCool, Dell can offer customers a broad, validated, and warrantied portfolio of solutions. This allows them to match the best technology (e.g., direct-to-chip, immersion) to specific customer needs rather than being limited to a single in-house design.

How financially significant is this AI and liquid cooling strategy for Dell?
The strategy is extremely significant and financially successful. The article highlights that Dell’s AI server shipments hit $8.2 billion in a single quarter (Q2 FY26), with an outstanding backlog of $11.7 billion. This momentum led the company to raise its full-year AI server revenue forecast to $20 billion, validating the massive market demand for its integrated AI infrastructure solutions.