Summary of Key Points from the Conference Call Industry Overview - The conference focused on the **Data Center Infrastructure** industry, particularly the developments and trends in cooling and power solutions for data centers, with a positive outlook on demand and infrastructure spending [1][4][9]. Core Insights and Arguments - **Strong Demand and Infrastructure Commitment**: The demand for data center infrastructure remains robust, with capital spenders committed to long-term investments, driven by productivity and diverse business models [1][4]. - **Technology Evolution**: Continuous advancements in cooling (CDUs) and power (HVDC) technologies are favoring major players, with larger format solutions becoming more prevalent. Smaller vendors are struggling to compete due to price pressures [1][4][9]. - **Competitive Landscape**: The competition is increasingly concentrated among larger, established players, with a growing moat around successful technology providers. The bear case of disruption and price pressure is being challenged by the emergence of critical partnerships and solutions [1][4][9]. - **AI and Infrastructure**: AI applications are driving demand for data centers, with companies like Microsoft highlighting the need for infrastructure that can support evolving AI workloads. The current demand exceeds supply, reinforcing the need for continued infrastructure investment [9][11]. Company-Specific Highlights Vertiv (VRT) - **Product Offerings**: Vertiv showcased AI-ready racks, modular power solutions, and advanced liquid cooling systems, emphasizing their comprehensive technology portfolio across power, cooling, and modular solutions [5][6]. - **Service Capabilities**: Vertiv has built a significant service organization with over 4,400 technicians globally, enabling them to provide lifecycle services and rapid response to customer needs [11][12]. - **Innovative Solutions**: The introduction of predictive maintenance services and advanced fluid management capabilities positions Vertiv as a leader in optimizing data center operations [12][11]. - **Power Management**: Vertiv is actively supporting the transition to 800V power systems, which will enhance efficiency and scalability for future data center architectures [13][9]. nVent - **New Product Launches**: nVent introduced a new portfolio of modular data center liquid cooling solutions, emphasizing reliability and user experience through a common control platform [18][19]. - **Market Positioning**: The company is participating in initiatives like Project Deschutes to accelerate liquid cooling adoption, positioning itself as a key player in the evolving data center landscape [20][19]. Motivair (Schneider Electric) - **Growth Projections**: Motivair is expected to achieve around $300 million in revenues, reflecting over 100% growth from the previous year, driven by its end-to-end liquid cooling portfolio [22]. - **Integration with Schneider**: The integration with Schneider Electric enhances Motivair's capabilities in deploying optimized electrical infrastructure alongside liquid cooling solutions [22]. Modine - **Innovative Chiller Design**: Modine announced a new stainless steel variant of its TurboChill DCS chiller, designed for high-pressure environments and optimized for liquid cooling systems [26]. - **Market Demand**: The company is experiencing strong demand, with significant orders anticipated from innovative hyperscalers, projecting potential revenues in the $250 million range [26]. Eaton - **HVDC Transition**: Eaton is preparing for the HVDC transition with new products and technologies that will support future data center power needs [27][28]. Boyd - **Advanced Cooling Technologies**: Boyd showcased its Chip to Ambient thermal circuit, designed to optimize energy consumption in liquid cooling systems for AI applications [29][30]. Additional Important Insights - **Market Dynamics**: The data center infrastructure market is witnessing a shift towards larger, more efficient cooling solutions, with significant growth expected in the adoption of CDUs and liquid cooling technologies [36]. - **Collaboration and Partnerships**: Companies are increasingly forming partnerships to enhance their product offerings and address the challenges of high-density computing environments [19][22]. - **Future Trends**: The industry is moving towards more integrated solutions that combine power and cooling, with a focus on modularity and scalability to meet the demands of modern AI workloads [25][29]. This summary encapsulates the key points discussed during the conference call, highlighting the positive outlook for the data center infrastructure industry and the strategic positioning of major players within it.

Industry Overview - The artificial intelligence (AI) sector, bolstered by the growth of cloud computing and data centers, is experiencing a robust demand scenario, with a significant surge in data center capacity needed to manage and store cloud-based data [1] - AI infrastructure capital expenditure (capex) is projected to exceed $1 trillion by 2028 according to Goldman Sachs and Bank of America, while JP Morgan and Citigroup forecast a cumulative total of $5 trillion by 2030. McKinsey & Co. estimates that global AI-powered data center infrastructure capex will reach around $7 trillion by 2030 [2] Company Recommendations - Investors are advised to buy and hold five non-technology U.S. companies that are expected to benefit from the AI-driven data center boom in 2026. These companies have shown significant stock performance in 2025 [3] - The recommended companies include Comfort Systems USA Inc. (FIX), Vertiv Holdings Co. (VRT), Mirion Technologies Inc. (MIR), BWX Technologies Inc. (BWXT), and EMCOR Group Inc. (EME), all of which currently hold a Zacks Rank of 1 (Strong Buy) or 2 (Buy) [4] Company Insights Comfort Systems USA Inc. (FIX) - FIX operates primarily in the HVAC markets and is experiencing increased demand for specialized HVAC solutions due to the data center boom driven by AI and cloud computing [7][8] - The company is expanding its data center construction work, which is becoming a significant growth driver and attracting M&A activity [10] - Expected revenue and earnings growth rates for FIX are 14.7% and 16.4%, respectively, for the next year, with a 20.1% improvement in the Zacks Consensus Estimate for next year's earnings over the last 30 days [11] Vertiv Holdings Co. (VRT) - VRT is a leading provider of critical digital infrastructure for data centers and is benefiting from strong market demand and an extensive product portfolio [12][13] - The company is strategically expanding its capacity to meet the growing demand for AI-enabled solutions and has made acquisitions to enhance its service capabilities [13][14] - Expected revenue and earnings growth rates for VRT are 20.7% and 26.3%, respectively, for the next year, with a 6.8% improvement in the Zacks Consensus Estimate for next year's earnings over the last 30 days [15] Mirion Technologies Inc. (MIR) - MIR provides radiation detection and monitoring products and is focused on expanding its reach in the nuclear energy sector [16] - The company is integrating digital technologies into its radiation safety solutions and has recently partnered with Westinghouse Electric Company [17] - Expected revenue and earnings growth rates for MIR are 24.7% and 26.5%, respectively, for the next year, with a 1.6% improvement in the Zacks Consensus Estimate for next year's earnings over the last 30 days [18] BWX Technologies Inc. (BWXT) - BWXT manufactures nuclear components and is benefiting from strong bookings and government contracts, particularly in the nuclear sector [19][20] - The company's total backlog reached $7.4 billion, up 119% year over year, driven by robust federal demand and a growing pipeline [21] - Expected revenue and earnings growth rates for BWXT are 14.5% and 9.9%, respectively, for the next year, with a 0.2% improvement in the Zacks Consensus Estimate for next year's earnings over the last seven days [24] EMCOR Group Inc. (EME) - EME is a leading provider of critical infrastructure to AI-powered data centers, focusing on electrical infrastructure and cooling systems [25] - The company is gaining traction in the data center construction market, which is contributing to its expanding performance obligations [26][27] - Expected revenue and earnings growth rates for EME are 5.9% and 8.6%, respectively, for the next year, with a 1.2% improvement in the Zacks Consensus Estimate for next year's earnings over the last 30 days [28]

Core Insights - The CalCompetes tax incentive program, established in 2013, has awarded tax credits to over 1,200 companies, resulting in approximately 161,000 jobs created in California [3] - Recently, California awarded $99.9 million in tax credits to nine manufacturers, which is expected to generate over $370 million in investments and support an estimated 2,752 jobs with an average annual salary of $139,000 [9] Tax Credit Program Details - The state has around $308 million in CalCompetes tax credits available, with application periods set for January 5 to January 26, 2026, and March 2 to March 16, 2026 [5] - The latest round of awards includes companies from various sectors such as aerospace, wastewater treatment, data center infrastructure, and clothing design [3][4] Economic Growth Strategy - Governor Newsom's 10-year economic growth plan, "California Jobs First Economic Blueprint," aims to streamline business and workforce development to enhance job creation, particularly in the manufacturing sector [6] - The plan includes a $52 million investment in apprenticeships for high-demand sectors like advanced manufacturing and an additional $16 million for pre-apprenticeship programs targeting youth aged 16 to 24 [7]

Core Insights - Celestica Inc. has launched the SD6300 ultra-dense storage expansion system to tackle data growth challenges in AI environments and data centers [1][4] - The SD6300 is recognized as the industry's highest density and most compact JBOD, designed to optimize data center space and reduce capital and operational expenditures [2][4] Product Features - The SD6300 is a 4U JBOD with SAS-4 uplink, featuring 108 dual-port LFF SAS drive bays and a compact footprint of 1125 mm, fitting into standard 1200 mm racks [2][4] - It supports up to four dedicated SAS-4 drive bays for solid-state drives, enhancing overall system read and write performance [4] Target Applications - The SD6300 is suitable for various data-intensive applications, including AI data ingest, archiving, data lakes, cold storage, object storage, big data, and analytics [3][4] - It is particularly relevant for sectors such as research, oil and gas exploration, government, healthcare, and financial services [3] Market Positioning - The introduction of the SD6300 addresses the exponential challenge of data growth, providing a high-performance foundation for data-intensive applications [4] - Celestica aims to maximize storage density and improve data center floor space utilization while ensuring greater data availability through high availability and redundant architecture [7]

Core Insights - Investors are encouraged to focus on companies that generate strong returns after accounting for all operating and non-operating expenses, making profitable companies a smarter investment choice [1] Company Analysis - Micron Technology, Inc. (MU) has a 12-month net profit margin of 22.9%, leading the profitability screen [6][9] - Vertiv Holdings Co (VRT) has a 12-month net profit margin of 10.7%, indicating solid operating efficiency [7][9] - Corning Incorporated (GLW) has a 12-month net profit margin of 9.2%, reflecting consistent performance [10][9] Profitability Metrics - The net income ratio measures a company's profitability by reflecting the percentage of net income to total sales revenues, with a higher ratio indicating better revenue generation and expense management [3] - Additional screening parameters include Zacks Rank equal to 1, trailing 12-month sales and net income growth higher than the industry, and a strong buy percentage rating greater than 70% [4][5]

Vertiv (NYSE:VRT) FY Conference Summary Industry Overview - Vertiv is a global leader in digital critical infrastructure, with 80% of its operations focused on the data center sector, which is experiencing strong and long-term growth [2][3] - The company has a comprehensive portfolio that includes power, thermal management, and prefabrication solutions, positioning it well in the market [2][3] Key Points and Arguments Market Position and Growth - Vertiv has a strong market position with a complete portfolio that allows it to engage with major players like NVIDIA and large colocation providers [3] - The company reported a 30% growth in backlog, indicating robust demand and a strong pipeline of future orders [5][6] - North America is currently the primary growth driver, but there are significant opportunities for expansion in other regions, particularly in AI capacity [7][8] Revenue and Order Visibility - The company has good visibility into 2026 due to strong Q3 orders and a healthy backlog, which resembles pre-existing growth patterns [5][6] - Large-scale projects, such as gigawatt-scale announcements, will be deployed in stages, with order-to-deployment cycles ranging from 9 to 15 months [10][11] Competitive Dynamics - The industry is consolidating, with several players merging, which Vertiv views positively as it leads to a more rational market [12][13] - There is no significant double ordering in the industry, as orders are tied to specific projects, reducing cancellation risks [16] Capacity Management - Vertiv is actively expanding its capacity to meet growing demand, with a focus on efficiency and productivity [17][18] - The company is addressing potential constraints in data center growth, such as power availability and skilled labor, which are being managed effectively [18][19] White Space Opportunities - The company sees significant potential in the "white space" of data centers, particularly with high-density racks that require advanced power and cooling solutions [20][21] - Recent acquisitions, such as Great Lakes, enhance Vertiv's capabilities in liquid cooling and high-voltage DC power distribution [21][22] Service and Technology Integration - Service is a critical component of Vertiv's value proposition, with a growing number of field engineers to support customer needs [27][28] - The company is investing in predictive maintenance and system optimization to enhance service offerings [28] Financial Outlook - Vertiv aims for mid-20s margin growth by the end of the decade, driven by operational leverage and efficiency improvements [30][31] - The company has a strong balance sheet, allowing for continued investment in technology and capacity expansion, including potential M&A opportunities [32][33] Collaboration and Future Technologies - Vertiv collaborates with hyperscalers and companies like NVIDIA to pioneer future technologies, such as 800 volt DC power systems [34][36] - The company is positioned to manage the transition between existing and new technologies, ensuring it remains competitive [36] Enterprise Growth Potential - There is potential for enterprise growth, particularly in leased and colocation spaces, as AI adoption increases [37] Additional Important Insights - The prefabrication capabilities of Vertiv are crucial for reducing time to market for data center owners, addressing on-site construction challenges [24][25] - The company emphasizes the importance of technology in driving growth and addressing industry challenges [25][28]

Core Viewpoint - Vertiv is positioned for growth in the data center infrastructure sector, driven by increasing AI-related investments, but current stock valuation may not reflect its earnings potential due to external cost pressures like tariffs [1][4][8]. Company Overview - Vertiv is a leader in data center infrastructure, providing power, thermal management, and IT equipment, and is collaborating with Nvidia on new power-system solutions for high-voltage direct current data centers set to launch in 2027 [2][4]. - The company has experienced a stock price increase of over 67% this year, with a market capitalization of $69 billion [3][4]. Financial Performance - Vertiv has raised its full-year sales forecast consistently, with a current guidance of $10.2 billion in sales for 2025, reflecting a 10.9% increase from earlier estimates [6]. - However, the increase in sales guidance has not translated into proportional increases in operating profit and free cash flow, with adjusted operating profit expectations rising only 6.5% and free cash flow expectations increasing by 15.4% [5][6]. Cost Challenges - The company has faced cost headwinds due to tariffs, which have impacted its ability to achieve expected profit margins. Management anticipates that these tariff-related challenges will not persist into the next year [8][11]. - The CFO has indicated that achieving low 30% incremental margins is crucial for reaching a 25% operating margin target by 2029, with an expected organic revenue CAGR of 12%-14% from 2024 to 2029 [11][12]. Market Outlook - Analysts predict a sales increase of approximately $2 billion in 2026, with an expected $638 million rise in operating profit, indicating a 32% incremental increase [9]. - The growth in AI and data center spending is expected to accelerate, with management projecting a 27% organic revenue growth in 2025 [12]. Investment Consideration - While Vertiv's current earnings may not suggest significant undervaluation, the potential for growth driven by AI and data center investments could justify its valuation if tariffs do not continue to hinder profitability [13].

Core Insights - Vertiv (VRT) and Applied Digital (APLD) are significant players in the data center infrastructure market, with Vertiv focusing on thermal and power management systems, while Applied Digital specializes in high-performance data centers optimized for AI and high computing workloads [1][2] Market Overview - The data center infrastructure management market was valued at approximately $3.06 billion in 2024 and is projected to grow at a CAGR of 17.3% from 2025 to 2030, presenting substantial growth opportunities for both Vertiv and Applied Digital [2] Vertiv (VRT) Analysis - VRT's product portfolio includes thermal systems, liquid cooling, UPS, switchgear, busbars, and modular solutions, with organic orders increasing by about 21% and a book-to-bill ratio of 1.4 times in Q3 2025, indicating strong growth prospects [3][4] - The backlog for VRT grew 12% sequentially and 30% year-over-year to $9.5 billion, driven by the rapid adoption of AI and the need for data centers to support digital transformation [3][5] - VRT's recent acquisition of Purge Rite Intermediate for approximately $1.0 billion aims to enhance its liquid-cooling and thermal-management services for AI and high-performance data centers [4] - In the Americas, VRT's organic sales surged 43% in Q3 2025, while APAC saw a 21% increase, highlighting strong demand driven by AI adoption [5] Applied Digital (APLD) Analysis - APLD is experiencing robust demand for data center infrastructure, particularly with a focus on energy efficiency [6] - The partnership with CoreWeave, initially contracted for 250 megawatts and later expanded to 400 megawatts, represents a total contract value of $11 billion over 15 years, providing strong revenue visibility [7][9] - APLD's ability to shorten construction timelines from 24 months to 12-14 months enhances its capacity to meet urgent demands from hyperscalers, who are expected to invest over $350 billion in AI infrastructure in 2025 [8][9] Stock Performance and Valuation - Year-to-date, Vertiv's shares have increased by 61.1%, while Applied Digital's shares have surged by 306.8%, attributed to strong demand and strategic partnerships [10] - Both companies are currently considered overvalued, with Vertiv trading at a trailing Price/Book ratio of 19.94X compared to Applied Digital's 8.15X [12] - The Zacks Consensus Estimate for Vertiv's 2025 earnings is $4.11 per share, reflecting a 7.31% increase over the past 30 days, while APLD is projected to report a loss of 31 cents per share [14][16] Earnings Performance - Vertiv has consistently beaten earnings estimates in the trailing four quarters, with an average surprise of 14.89%, while Applied Digital has missed estimates in two of the last four quarters, with a negative average surprise of 104.22% [17] Conclusion - Both Vertiv and Applied Digital are positioned to benefit from the data center infrastructure boom, but Vertiv's stronger earnings momentum and diversified growth drivers suggest it may offer greater upside potential in the near term [18] - Applied Digital faces challenges with rising loss estimates and customer concentration, which may temper its near-term prospects [18][19]

Core Insights - IREN Ltd and Cipher Mining Inc. are making significant strides in the AI infrastructure sector with multi-billion-dollar deals that are reshaping the competitive landscape [1] - The demand for AI-driven computing is driving infrastructure providers to partner with major tech companies and cloud leaders [1] IREN's Microsoft Deal - IREN secured a five-year contract worth $9.7 billion with Microsoft to provide access to Nvidia's latest GB300 GPUs for cloud-based AI services [2] - The agreement includes a 20% prepayment from Microsoft and a commitment from IREN to purchase $5.8 billion in Nvidia GPUs and related equipment from Dell Technologies [2] - The infrastructure will be located at IREN's Texas campus, supporting 200 megawatts of AI compute workloads, enhancing IREN's credibility and revenue stream in the AI supply chain [3] Cipher's Partnerships - Cipher Mining signed a 15-year lease worth $5.5 billion with Amazon's AWS to deliver 300 megawatts of AI infrastructure, positioning itself as a leader in repurposing crypto-mining assets for AI data centers [3] - Cipher also entered a $3 billion, 10-year colocation deal with Fluidstack, backed partially by Google, which includes $1.4 billion in guaranteed lease obligations and a 5.4% stake in Cipher [4] - The Texas facility is set to deliver scalable AI workloads through 2036, further solidifying Cipher's position in the market [4] Industry Outlook - Industry experts anticipate more partnerships and billion-dollar deals as hyperscalers compete to secure GPU resources and clean power [5] - Other companies in the AI data center infrastructure space include Applied Digital Corp, Core Scientific, Hut 8 Corp, and HIVE Digital Technologies [5]

Core Insights - Celestica's shares increased by 14.9% for the week, driven by a strong third-quarter earnings report featuring double-digit revenue growth and faster adjusted earnings growth [1][3] Financial Performance - Celestica's revenue grew by 28% year over year in Q3, surpassing analyst expectations, while adjusted earnings per share rose by 52% to $1.58 [3] - The company raised its full-year outlook, projecting revenue of approximately $12.2 billion and adjusted EPS of $5.90 for 2025, with expectations of revenue reaching $16 billion and adjusted EPS of $8.20 for 2026 [4] Market Position and Outlook - The CEO highlighted Celestica's role in the AI infrastructure market, indicating strong demand for its storage, compute, and networking solutions [5] - The 2026 outlook is supported by robust demand from major customers, with potential revenue growth of 31% if guidance is met, and indications of continued demand into 2027 [6] Valuation Considerations - Despite strong performance, Celestica's stock valuation appears stretched, trading at approximately 42 times forward earnings based on the 2026 outlook [7] - The company is exposed to risks associated with the AI infrastructure boom, which could lead to rapid changes in its fortunes [7] Summary - Celestica reported strong results and forecasts impressive growth through 2026, benefiting from increasing demand for AI infrastructure, although its stock valuation is considered high [8]