Major data center supplier CEO just explained growing AI problem

Modine’s Q4 report and management commentary highlight a material re-rating of its data-center business: record orders, a landmark $4 billion long‑term chiller/capacity agreement through 2029 and multi‑year revenue visibility have driven bullish investor interest despite near‑term margin pressure. Q4 revenue surged to $954.4M driven by Data Centers and Climate Solutions, but gross margin compressed to 22.5% (down 320 bps) as the company absorbs capacity buildout costs, tariffs and weather disruptions. Management is guiding FY2027 adjusted EBITDA of $650–$680M and expects data‑center growth to remain elevated, supporting a path to ~$1–2B of data‑center revenue by FY2028 if execution holds. Market impact: the deal and upbeat ordering drove sharp share gains and reduce demand risk for future capacity, but investors will watch margin recovery, cash conversion and customer concentration risk as key catalysts and risks for valuation.