Vertiv Holdings (VRT) is a $36 billion provider of critical digital infrastructure solutions, including datacenter power and thermal management.

Vertiv grew revenues 20% in 2023, 16.6% in 2024, and this year is expected to top $9.2 billion for 15% growth.

Profit growth has also been on a tear, with the current consensus for 2025 projecting a 26% advance to $3.59.

Big customers across telecom, enterprise & cloud service providers (CSPs) include AT&T, Verizon, China Mobile, Equinix, Alibaba Cloud, Tencent, Deutsche Telekom, Ericsson, Siemens, and Vodafone.

In addition to this broad Asian and European market exposure, Vertiv also serves NASA and the Department of Defense.

Total Addressable AI Goldmine

While they don't name the big US CSPs like AWS, Azure, Google Cloud, and Oracle as customers, it is believed Vertiv provides some solutions for edge deployments and high-density AI workloads that are likely utilized by a broader range of cloud providers indirectly, given their focus on scalable, efficient infrastructure.

And given that the big hyperscalers, including Meta, OpenAI, and Tesla, are still growing their datacenter spend at 35-40% this year, Vertiv should be able to maintain high teens revenue growth.

Vertiv is among the top vendors in the $30 billion modular data center market, which is projected to reach $80 billion by 2030. Top competitors include Dell, Schneider Electric, Johnson Controls, Eaton, Huawei, and ABB. 

But the bigger picture for the next five years targets Vertiv’s ability to scale liquid cooling and modular systems in a $1.5 trillion AI infrastructure opportunity, according to CRN, an IT channel research group.

Strategic Partners and Technology Ecosystem Collaborators

That last projection may only grow as one of Vertiv's key partners, NVIDIA (NVDA), is targeting a $1 trillion opportunity just to upgrade old datacenter CPU-based systems to GPU-driven platforms.

NVIDIA partners with Vertiv for high-density power/cooling solutions and makes them part of the NVIDIA Partner Network as a Solution Advisor.

Cisco, specializing in networking & edge computing, has a joint infrastructure development for IoT and edge computing with Vertiv. And HPE Hybrid Cloud Solutions collaborates on modernization from edge to cloud.

Partnership with Compass Datacenters highlight Vertiv’s focus on AI-ready infrastructure and liquid cooling for high-density computing. The two companies have a multi-year, multi-billion-dollar agreement for deployment of Vertiv's CoolPhase Flex cooling solutions.

According to DataCenterFrontier.com...

The Vertiv CoolPhase Flex might well be the first packaged system to provide a seamless integration of liquid cooling and refrigerant-based air-cooling technologies.

This new offering from Vertiv merges both methods into a single, compact unit that has the flexibility to meet the changing requirements of next-generation data centers.  

The platform's ability to efficiently move between air and liquid cooling as operational demands shift gives the data center operator an important tool in meeting their sustainability goals.

Ballard Power Systems, who specializes in hydrogen fuel cells, is another key partnership for zero-emission UPS systems and sustainability.

Finally, Vertiv has a key foothold in Scandinavia with SEC DATACOM who provides Nordic IT-distribution. They are Vertiv’s official distributor in Denmark, Sweden, Norway, and Finland.

The Aftermath of the DeepSeek AI Threat

I've written extensively about the gyrations in datacenter/AI stocks since the invasion of the Chinese chatterbot, most recently here...

DeekSeek and the 5th Industrial Revolution

When VRT shares were on sale in February, I jumped in. But it's still been a bumpy ride.

Here was one investment bank view last week that explains the issues after the company's Q4 earnings report on Feb 12 -- after which estimates have only been sustained.

Vertiv shares have sharply declined in recent weeks amid concerns over potential reductions in AI infrastructure spending, but the market reaction appears excessive, UBS Securities said in a research note on Tuesday Feb 25.

"Our conclusion is the recent sell-off is way overdone, as it implies > 30% reduction in data center capacity growth vs. what was priced in just 30 days ago."

The bank's analysis found that shares are discounting significantly lower growth than consensus forecasts suggest.

Consensus estimates project 13% annual revenue growth and 18% annual profit growth for Vertiv from 2024 to 2028. Here was a great summary of the UBS report from MT Newswires...

Based on the UBS valuation framework, the stock's current valuation implies only 9% revenue growth and 13% profit growth over the same period translating to a $1.7 billion shortfall in projected revenue and $550 million less in cumulative EBITDA compared to consensus expectations.

The firm also translated these revenue figures into data center capacity growth, assuming a $3.5 million total addressable market per megawatt and a 10% market share for Vertiv. Under consensus estimates, Vertiv's projected $5.1 billion in revenue growth from 2024-2028 would correspond to 14,600 megawatts of new data center capacity.

However, under UBS's "what's priced in" framework based on the lower $3.4 billion revenue estimate-expected capacity growth drops to 9,700 megawatts, reflecting a reduction of 4,900 megawatts in projected capacity growth.

(end of excerpt from MT Newswires report)

In essence, UBS believes the market is discounting a massive downward revision in hyperscaler capex, which, if you read my update from the week of Feb 17 is clearly not what is happening.

UBS has a buy rating on Vertiv, with a price target of $135. And I am long VRT and looking to add on any dips below $85.

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