When people think about artificial intelligence data centers, they usually focus on the producers of AI chips and server hardware. But there's another critical aspect: the power and cooling infrastructure needed to run those systems. That's where Vertiv comes in.
The Westerville, Ohio-based company specializes in digital infrastructure technology for cloud data centers and communication networks. Vertiv provides the electrical backbone and temperature management systems for data centers — a focus that recently has given Vertiv stock a lift.
"The digital infrastructure is a very essential element (for data centers)," Vertiv Chief Executive Giordano Albertazzi told Investor's Business Daily. "The power and thermal really keeps the thing alive and working."
The infrastructure required for AI computer systems is a step up from what was required from standard internet cloud data centers, Albertazzi said. The latest AI graphics processing units from Nvidia, called Blackwell, generate a lot of heat and require liquid cooling systems to remove it. Traditional air cooling systems are insufficient, he said.
Vertiv and Nvidia have partnered to create reference designs for power and cooling infrastructure to enable Nvidia Blackwell architectures up to 7 megawatts.
"For us, the partnership with Nvidia is tremendously important in terms of making sure that we have clear visibility of their future technology road map because of the challenges of power and thermal," Albertazzi said.
Vertiv needs to ensure that the infrastructure will be there to enable Nvidia's future products, he said.
Vertiv Stock: A 'Sustainable' Business
One investor concern about the current AI data center boom is whether it will last. But Albertazzi said the business is "very sustainable."
"We have visibility quite a few years out," he said. "We believe this is a long-term, secular trend."
One only needs to look at the capital expenditure plans of Big Tech firms like Alphabet, Amazon, Meta Platforms and Microsoft to see the continued demand, he said.
And it's a global trend. While the U.S. is well underway with its AI data center buildout, other regions like Europe are just getting started, Albertazzi said.
Vertiv has competitive advantages over rivals in the digital infrastructure sector, he said. They include its global footprint and support services covering the life cycle of data centers.
Riding AI Tailwinds Into 2025
On Oct. 23, Vertiv beat Wall Street's targets for the third quarter. Its adjusted earnings rose 46% year over year to 76 cents a share, while sales climbed 19% to $2.07 billion.
But Vertiv provided mixed guidance for the current period. For the fourth quarter, Vertiv forecast earnings above views, but its sales target was a tad short of estimates. Still, it expects earnings per share growth of 46% and sales growth of 14% in the December quarter.
"In a nutshell, we are excited about the year ahead," Albertazzi said on a conference call with analysts. "The market is strong and we're certainly feeling the AI tailwinds that should continue to strengthen next year."
JPMorgan analyst Stephen Tusa called Vertiv one of the "core-4" companies in the "electrical equipment/multi-industry" sector. The others are Eaton, Trane Technologies and Lennox International, he said in an Oct. 28 report.
Tusa rates Vertiv stock as overweight, or buy, with a price target of 124.
Vertiv Stock Is A Recent Breakout
Vertiv ended regular-session trading Thursday at 109.29. On Oct. 3, Vertiv stock broke out of a cup-with-handle base at a buy point of 103.69, according to IBD MarketSurge charts.
Oppenheimer analyst Noah Kaye rates Vertiv stock as outperform with a price target of 121.
"We regard Vertiv as a leading AI infrastructure player with sustainable competitive differentiation in data center power and thermal management, positioned well for growth and wallet share gains as compute density increases," Kaye said in a client note.
Vertiv competes with ABB, Eaton, Rockwell Automation, Schneider Electric and others in the data center infrastructure market.
Vertiv went public in February 2020 after its merger with a special-purpose acquisition company.
Meanwhile, Vertiv stock is on three IBD stock lists: Leaderboard, IBD 50 and Big Cap 20.
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