Vertiv Holdings (VRT) stock climbed in Wednesday's premarket trading after management spent Tuesday at Baird's industrial conference talking up artificial intelligence and cloud infrastructure demand. The message landed well.
Management said hyperscalers and AI labs continue to drive growth. Vertiv's project pipeline is expanding, with demand strengthening across North America and international markets.
There is one big catch, though: limited power availability remains a major obstacle to data center expansion. You can build all the racks you want, but somebody has to keep the lights on.
Vertiv Advances 800-Volt DC Infrastructure
Vertiv is developing 800-volt direct current (DC) systems alongside traditional alternating current (AC) solutions.
Management expects AI factories using NVIDIA Corp. (NVDA)'s Vera Rubin platform to adopt DC infrastructure. However, colocation data centers may continue using conventional systems for greater flexibility.
Hybrid 800-volt DC solutions could arrive in the second half of 2027. Full end-to-end systems may follow in the second half of 2028.
Acquisition Expands Power Capabilities
Vertiv's acquisition of Utility Infrastructure Group (UIG) strengthens its power generation and grid management capabilities.
The deal adds technology that coordinates fuel cells and gas turbines with electricity grids.
It also gives Vertiv earlier visibility into data center projects and creates opportunities to increase revenue per megawatt.
Management plans to expand its power and cooling portfolios through product development and acquisitions.
Liquid Cooling Demand Accelerates
Vertiv expects liquid and air cooling systems to coexist as AI computing demands increase.
Management highlighted cooling distribution units (CDUs) as critical components of AI infrastructure.
The company also expects established suppliers with strong manufacturing and service networks to benefit as the market consolidates.
Meanwhile, the transition from single-phase to two-phase liquid cooling will likely be gradual.
Vertiv is exploring water-glycol and refrigerant-based technologies through internal development and potential acquisitions.
Manufacturing Capacity Remains a Challenge
CFO Craig Chamberlin identified manufacturing expansion as the biggest challenge to faster growth.
Vertiv aims to increase production without compromising quality, delivery schedules or profit margins.
The company is also factoring expected commodity cost increases and inflation into customer quotations.
Despite inflationary pressure, Chamberlin said Vertiv is not seeing meaningful customer resistance to higher prices. The company factors expected cost increases into its quotations to protect margins.
Chamberlin added that Vertiv does not believe it is losing market share, suggesting customers remain willing to pay for its products and services. That is a nice position to be in when everyone else is worried about pricing power.
Vertiv's Strong Earnings Support Growth Outlook
Last month, Vertiv reported better-than-expected third-quarter results and raised its 2026 forecast.
Adjusted earnings of $2.21 per share topped the $1.83 estimate. Revenue surged 61% year over year to $4.313 billion, beating Wall Street's $3.760 billion estimate.
The company also raised its full-year adjusted earnings forecast to $7.15 per share from $6.65 to $6.75. That exceeded the $6.74 analyst estimate.
Vertiv increased its annual revenue forecast to $14.65 billion from $14 billion, above the $14.016 billion consensus.
The company also issued a stronger-than-expected fourth-quarter outlook.
VRT Price Action: Vertiv Holdings shares were up 6.54% at $206.93 during premarket trading on Wednesday, according to market data.
