The mechanism. When Virginia, Ohio, Texas, and a growing list of states court hyperscale data centers, the headline incentive is a sales-and-use tax exemption on "qualifying computer equipment." Read the actual statutory language — Virginia's Data Center Retail Sales & Use Tax Exemption is the template most states copied — and it doesn't just exempt servers. It explicitly enumerates chillers, computer room air conditioners (CRACs), HVAC systems, cooling towers, water pumps and piping, plus electrical substations, power distribution equipment, cogeneration gear, batteries, and generators. That's not incidental. It's the tax code naming, line by line, the product catalogs of Vertiv and Eaton. Every state that dangles a "come build here" package to Amazon, Microsoft, or Google is simultaneously waiving 5-7% sales tax on the power and thermal-management hardware those hyperscalers must buy from a narrow set of vendors — meaning the abatement's real economic transfer flows through to whoever sells the switchgear and chillers, on every project, regardless of who "won" the site-selection headline.

Who cashes in:

  • Vertiv (VRT) — roughly three-quarters of Vertiv's revenue comes from data-center customers, and thermal management (the CRACs/chillers/cooling towers named explicitly in these exemptions) is its core product line. Every new hyperscale campus that clears a state's minimum-investment threshold for the exemption is a project where Vertiv's cooling bill of materials gets purchased tax-free, lowering the hyperscaler's effective cost of choosing Vertiv gear and widening its addressable order size per site.
  • Eaton (ETN) — its electrical distribution, UPS, switchgear, and battery-storage lines match the "power distribution equipment," "cogeneration equipment," and "batteries" categories called out by name in the exemption statutes. Eaton's backlog in data-center electrical products has been a standout segment even against its broader industrial mix.
  • Nvidia (NVDA), Dell (DELL), Super Micro (SMCI) — secondary beneficiaries: the same exemptions typically also cover "computer equipment," so GPU servers and racks ride the same tax break, but that spend was happening regardless of state incentives; the power/cooling carve-out is the more distinctive, less-priced-in mechanism.