Solid first-quarter results from Vertiv reflect the continued growth of the AI data-center market as well as company-specific gains, the firm's chief executive says. Vertiv stock rose Thursday.
"The view of the market that we had six months ago is the view of the market we have nowadays," Vertiv Chief Executive Giordano Albertazzi told Investor's Business Daily. "The long-term trajectory is strong."
While the total market for data centers is seen growing at 9%-12% annually over a five-year period starting in 2024, Vertiv is growing faster. Last year, Vertiv's revenue increased 17% and in Q1 this year it rose 24%.
"Clearly we are taking market share," Albertazzi said.
He acknowledged that there's been some nervousness about the market amid reports that Microsoft and other hyperscalers are pausing some plans for new data centers.
But Vertiv hasn't seen any significant pullback in business plans among its customers.
"We have seen nothing out of the ordinary," Albertazzi said. "We continue to be very encouraged by the long-term outlook for the industry. It's a very strong secular trend."
The artificial intelligence megatrend is still at a "very early stage," he said. "We are starting to see a transition to inference from training."
Further, data-center builds are expanding beyond the hyperscalers to include enterprises, sovereign nations and "neoclouds," Albertazzi said. Neoclouds are cloud-computing providers specializing in AI such as CoreWeave.
Vertiv Stock Gets Two Price-Target Cuts
On the stock market today, Vertiv stock advanced 7.5% to close at 83.88. On Wednesday, Vertiv surged 8.6% to end the regular session at 78 after reporting first-quarter results before the market open.
However, two Wall Street firms with buy ratings on Vertiv stock turned cautious on Thursday and lowered their price targets.
Morgan Stanley analyst Christopher Snyder maintained his overweight rating on Vertiv stock but lowered his price target to 125 from 140. The lower price target reflects a "broad re-rating across the peer group," Snyder said in a client note.
TD Cowen analyst Michael Elias kept his buy rating on Vertiv stock but trimmed his price target to 133 from 139.
"The broader demand backdrop for data centers remains strong despite some shifts in the source of demand and supports our continued positive outlook on Vertiv," Elias said in a report.
Westerville, Ohio-based Vertiv provides power, cooling and other infrastructure for data centers, communication networks and commercial and industrial facilities.
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