Industrial name with AI ties makes a key move to boost its growing data center business

CNBC

06-05-2025

Dover , an American industrial company founded more than 70 years ago, is strengthening its foothold in a fast-growing market shaping the future of computing. The news Illinois-based Dover on Monday announced an agreement to pay more than $622 million in cash to acquire Sikora — a German firm whose technology supports the build-out of data centers. The deal, expected to close in the second quarter, gives Club name Dover a business that has experienced a double-digit organic growth rate over the last three years. Essentially, Sikora makes specialized systems that measure different parameters in the cables that go into energy-intensive data centers, which have become increasingly important as more companies adopt artificial intelligence and need ever-increasing computing power to run these heavy workloads. Sikora will soon become a part of Dover's pumps and process solutions segment, which includes Dover's thermal connectors for the liquid cooling of data centers. Big picture The announcement follows promising signs about continued data center spending. Eaton , a maker of power management solutions for AI data centers, posted a solid quarter on Friday. During the post-earnings conference call, incoming CEO Paulo Ruiz held Eaton's growth rate steady for its data center business despite macroeconomic uncertainty from President Donald Trump 's tariffs. Ruiz referred to the big tech companies that reported earnings in late April, which included portfolio names Meta Platforms , Amazon , and Microsoft, saying, "all the calls we have had this week, all the hyperscalers have confirmed the level of [capital expenditures]. So, we believe that this 15% [compound annual growth rate] for data centers is still intact." The data center market accounts for 17% of Eaton's overall revenue, which was $6.38 billion in the first quarter. Before that, Dover also had upbeat things to say about its data center exposed business when it reported first-quarter earnings last month. Management forecasted that 20% of Dover's portfolio will grow double digits in aggregate for 2025, in part, citing "strong demand" for its liquid cooling applications in AI data centers. Dover's Q1 revenue totaled $1.87 billion. Unlike Eaton, Dover does not break out its sales based on end market. Bottom line The Sikora deal is a small one for Dover, which has a $23.48 billion market capitalization, but we're happy to see it. "It's not a sexy or fancy business, but that's what Dover is. It's a collection of these niche businesses that are driving better margins and growth," Jeff Marks, the Investing Club's director of portfolio analysis, said Tuesday. "That's what they look to acquire." Sikora did nearly $114 million in sales last year. Even after the Sikora purchase, Dover will still have plenty of cash, which Jeff and Jim Cramer touted as a reason to favor Dover. Case in point: Dover ended Q1 with $2.8 billion of liquid assets — over 50% of that was excess cash. The Club sees two options: "They still have a lot of dry power and excess cash available to either look for more deal-making or maybe we see a step up in the buyback," said Jeff. DOV YTD mountain Dover YTD We continue to own this stock because of its industrial turnaround story with exposure to key mega trends. Not only the data center buildout to support AI computing, but also electrification more broadly. Dover's business in the biopharma industry is also another attractive area. We last added to our Dover position on April 9 at around $150 per share in an extremely oversold market. it was a discipline buy. The trade was shortly before President Trump froze "reciprocal" tariffs at 10% on U.S. trading partners, excluding China. On that news, the overall market surged higher, and Dover jumped 9.7% to roughly $166 apiece that day. Shares of Dover slipped Tuesday but still traded above $171 each. For the Club, we have Dover stock at a buy-equivalent 1 rating and a $210 per share price target. (Jim Cramer's Charitable Trust is long DOV, ETN, META, MSFT, AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. Dover Corp.'s Steam-Thru SIP connectors in use in a biopharmaceutical setting.
Dover , an American industrial company founded more than 70 years ago, is strengthening its foothold in a fast-growing market shaping the future of computing.