Big tech’s push into artificial intelligence has turned Nvidia and AMD into giants, dominating the market for high-performance GPUs. But while they power AI’s brain, there’s another critical piece of the puzzle that often goes unnoticed: the data center infrastructure itself. That’s where Vertiv comes in.
AI’s Insatiable Demand for Data Centers
Running AI models isn’t just about computing power—it’s also about keeping servers cool and power-efficient. The amount of energy needed to sustain AI infrastructure is staggering. According to the U.S. Department of Energy, data centers accounted for about 4% of the country’s electricity consumption in 2023, a figure expected to triple by 2028.
As hyperscalers like Microsoft, Meta, and Oracle funnel billions into AI-driven data centers, companies like Vertiv, which specialize in power and cooling solutions, are poised to benefit. Unlike Nvidia and AMD, which make the chips that drive AI, Vertiv builds the infrastructure that makes it all possible.
One of the company’s biggest bets? Liquid cooling. As AI servers push the limits of traditional cooling systems, liquid-based solutions are emerging as the next big thing. Vertiv’s CEO Giordano Albertazzi highlighted the acceleration of liquid cooling revenues during the company’s last earnings call, pointing to strong growth in this segment.
Revenue Growth Signals Strong Demand
Vertiv’s financial performance backs up the AI-driven optimism. The company’s revenue growth has been steep, with its order book jumping 37% over the past year. As AI workloads intensify, the demand for data center infrastructure will likely follow suit.
Here’s a look at Vertiv’s recent financial performance:
| Quarter | Revenue ($B) | YoY Growth |
|---|---|---|
| Q1 2023 | 1.52 | 22% |
| Q2 2023 | 1.73 | 26% |
| Q3 2023 | 1.92 | 31% |
| Q4 2023 (Projected) | 2.10 | 35% |
These numbers indicate a strong upward trend, reflecting the growing investments in AI infrastructure.
Big Tech’s Billions Fuel Growth Prospects
Over the last few weeks, AI infrastructure spending has dominated headlines. Major players have announced aggressive capital expenditure plans:
- OpenAI, Oracle, and SoftBank: A $500 billion AI infrastructure initiative named Stargate.
- Microsoft: An $80 billion investment into new data centers.
- Meta: A $65 billion commitment to AI-related projects.
For a company like Vertiv, which directly benefits from these projects, this kind of spending signals enormous long-term potential. If AI’s momentum continues, demand for liquid cooling and energy-efficient infrastructure could push Vertiv’s revenue even higher.
DeepSeek: A Potential Disruptor?
Just as everything seemed lined up for Vertiv, a curveball appeared—DeepSeek. The Chinese AI startup has shaken up investor sentiment by claiming it built a competitive AI model using older Nvidia chips instead of cutting-edge GPUs. If true, this could mean that AI development doesn’t require the latest (and most power-hungry) hardware, potentially reducing the need for rapid data center expansion.
But DeepSeek’s claims remain in question. Reports suggest that its model may not be as advanced as advertised or that it used more sophisticated hardware than initially stated.
If hyperscalers start pulling back on AI infrastructure spending because of DeepSeek, Vertiv’s growth could slow. That’s a key risk factor investors are watching.
Is Vertiv Stock a Buy?
At a forward price-to-earnings (P/E) ratio of 30, Vertiv trades at a premium compared to the S&P 500’s average of 24. This valuation reflects expectations of continued AI-driven growth.
But with DeepSeek’s potential impact still unclear, it’s hard to predict how much hyperscalers will spend in the coming years. Investors would be wise to track earnings reports from Microsoft, Meta, and OpenAI, as well as Vertiv’s own upcoming earnings call in early February.
For now, Vertiv remains one of the best infrastructure plays in AI. But whether it will sustain its momentum depends on how the AI arms race evolves.
