Up 422%, Vertiv Stock Is Hotter Than Nvidia. Why? Liquid Cooling

Core Viewpoint - Vertiv Holdings Co is positioned as a strong competitor in the data center liquid cooling technology market, showing significant stock performance compared to Nvidia, despite Nvidia's rapid growth in AI technology [2][3]. Market Opportunity - The server cooling market is projected to grow at a compound annual growth rate of 60.7%, increasing from $4.1 billion in 2024 to $10.6 billion in 2026 [4]. - Liquid cooling's share among AI servers is expected to rise from 23% to 57% within the next two years [4]. - The demand for energy in data centers is anticipated to increase by 30%, reaching 260 terawatt-hours by 2026, driven by the growth of AI [5]. Company Performance - Vertiv's orders grew by 60% in the quarter ending March 2024, resulting in a record backlog of $6.3 billion [6]. - Q1 2024 revenue reached $1.64 billion, a 7.9% increase year-over-year, and adjusted earnings per share were $0.43, up 79.2% from Q1 2023 [18]. Competitive Advantages - Vertiv's liquid cooling systems allow for more efficient heat dissipation compared to traditional fan cooling, which is becoming less effective with more powerful chips [7][8]. - The company can charge three to four times more for liquid cooling systems than for air cooling systems, enhancing profit margins [10]. Strategic Partnerships - Vertiv has established a partnership with Nvidia, which helps market and sell its products, boosting current and potential revenue [12]. - The collaboration includes joint product design efforts, particularly for future technologies requiring liquid cooling [13][14]. Future Outlook - Vertiv raised its full-year guidance, expecting organic growth of 12% and adjusted operating margins to expand to 17.7% [16]. - The company has seen a doubling of the pipeline for AI projects in the last two months, indicating strong momentum in the AI-related orders [17].