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Shares of Vertiv (VRT) have climbed more than 250% over the past year as investors increasingly focused on the company’s role in supplying critical power and cooling infrastructure for AI data center build-outs. The rally has pushed the stock to roughly 47 times forward earnings—an unusually high valuation for an industrial business.
Vertiv reported first-quarter adjusted earnings growth of 83% year over year. The increase was driven by the conversion of a project backlog that more than doubled last year to over $15 billion.
Management linked the momentum to a shift toward high-density AI racks, which rely on advanced liquid-cooling systems that Vertiv supplies.
As AI workloads increase rack power densities, liquid cooling is being adopted as the primary thermal solution for the most power-hungry compute rows. This liquid-cooled infrastructure is deployed alongside traditional air-cooled systems that continue to serve the rest of the data center floor.
Many new AI deployments use advanced direct-to-chip liquid cooling, in which fluid circulates through cold plates attached to high-performance chips to remove heat. That heat is then handled by the facility’s cooling systems, including Vertiv solutions that can reduce annual cooling energy consumption by up to 70%.
Vertiv provides the full chain of components and services, including coolant distribution units, pumps, heat rejection, and the service layer to maintain them. The broader offering increases content and value per rack.
Demand for Vertiv’s solutions supported growth in the Americas segment, where organic sales rose 44% in the first quarter. The company attributed the strength to spending from U.S. hyperscalers.
Vertiv’s collaborations with silicon partners, including Nvidia, also provide visibility into technical requirements for future deployments. In addition, the $15 billion backlog is expected to support a more reliable revenue stream over the next 12 to 18 months, with the size and quality of orders reducing near-term cyclical risk.
Converting larger, more complex projects is generating incremental margins of more than 30%. In the first quarter, adjusted operating margins expanded 430 basis points to 20.8%.
That profitability supported Vertiv’s raised forecast for 30% organic growth and 51% earnings growth in 2026.
The company’s cash flow growth is expected to help fund capacity expansion needed to meet demand. It also provides a buffer as Vertiv continues to face weakness in the EMEA segment, where organic sales fell 29% in the quarter. Management expects some recovery in the second half, but the core driver remains the Americas build-out.
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