Vertiv(US:VRT) The Motley Fool·2024-06-09 18:17Core Viewpoint - Vertiv has gained investor attention following a mention by Nvidia's CEO, indicating potential growth opportunities tied to the AI and data center sectors [2][10]. Company Overview - Vertiv, previously a subsidiary of Emerson Electric, was sold to private equity in 2016 and went public in 2020 through a SPAC [3]. - The company specializes in engineering and manufacturing power delivery and management systems for data centers [4]. Recent Developments - Vertiv's integration into Nvidia's ecosystem is seen as a significant growth driver, with a reported 15% increase in backlog of equipment and service orders, reaching $6.3 billion from late 2023 to early 2024 [5]. - The stock has experienced a notable rise, with a current market cap exceeding $36 billion, reflecting a valuation of nearly 40 times the expected 2024 earnings per share [6][8]. Market Dynamics - The rapid installation of AI in data centers is leading to increased energy consumption, raising concerns about global power demand [9]. - Vertiv's role in engineering cooling systems positions it as a critical partner in managing the heat generated by powerful AI servers [11]. Financial Outlook - Vertiv anticipates organic revenue growth of approximately 12% for the current year, excluding acquisitions and divestitures [12]. - The company’s operating margin stands at 14% over the last 12 months, indicating the need for margin expansion to support its elevated stock valuation [8]. Long-term Potential - Vertiv is viewed as a potentially strong player in the AI-driven data center supply chain, with prospects for sustained growth beyond current market hype [13].