The explosion in artificial intelligence (AI) demand is creating significant demand for data centers and the equipment that powers them. The leading AI computing platform provider, Nvidia (NVDA +5.56%), is developing the next generation of data center architecture. However, it's not doing it alone. Two of its key partners, Navitas Semiconductor (NVTS +11.94%) and Vertiv (VRT +6.99%), are set to play a significant role. Here's the lowdown.
Nvidia and the next generation of data centers
Nvidia recently discussed the next-generation 800-volt (V) high-voltage direct current (HVDC) in a blog post and cited several key partners it is collaborating with to accelerate adoption.
The change, from 54V DC data centers to 800V DC, is a game changer and is likely to result in the replacement of traditional 54V DC data centers used for AI and high-performance computing. Nvidia expects these new data centers to launch in 2027, so its partners must have solutions ready in time.
NASDAQ: NVDA
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In a traditional 54V DC data center, 13.8kV alternating current (AC) power (a voltage typically used to distribute power to neighborhoods or industrial facilities) enters the data center. It is then stepped down to a lower AC voltage. After that, the lower-voltage power is routed to IT racks, which contain power distribution units that convert it to 54V DC. From there, it's fed into another converter at the graphics processing units (GPUs) level, which converts it into an even lower DC voltage used to power the GPUs.
The new 800V HVDC data centers help simplify the process by converting the 13.8kV AC power into 800V DC at the data center perimeter and then straight to the IT rack, where it's transformed into the lower voltages necessary to run GPUs. Nvidia believes that the new data centers will:
- Improve efficiency by 5%
- Significantly reduce copper demand
- Reduce maintenance costs by 70%
- Lower cooling requirements
- Cut the total cost of ownership by 30%
NASDAQ: NVTS
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Navitas has excited investors with its Nvidia collaboration
Navitas had just $83.3 million in sales in 2024. The announcement of its collaboration with Nvidia on 800V HVDC data center architecture sent the stock into orbit -- up over 100% so far this year.
The gallium nitride (GaN) and silicon carbide (SiC) semiconductor company offers power conversion solutions that cover the entire power process in an 800V HVDC data center, from the initial conversion at the perimeter to the conversion from 800V DC to lower voltage at the IT rack.
It's not alone in offering semiconductor solutions to Nvidia, and it's up against some powerful competition, such as Infineon and STMicroelectronics (also Nvidia partners). However, it's a pure-play GaN and SiC company, and any significant revenue from 800V HVDC data center growth will move the needle for it.
It's challenging to assign a valuation to Navitas, as its future growth prospects are far from clear. Still, the Nvidia backing is significant, and so is the upside potential of Navitas becoming a key provider to Nvidia.
NYSE: VRT
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Vertiv, a hidden AI/data center stock
The transition to 800V HVDC data centers necessitates the development of new industrial-grade rectifiers to convert the 13.8kV AC grid power into 800V DC, as well as IT rack-level DC converters and backup systems, all of which are essential for providing a reliable power supply.
That's where Vertiv comes in. The company plans to have its 800V HVDC solutions available in the second half of 2026, and in time for Nvidia's rollout of its Kyber and Rubin Ultra platforms for the new data centers.
Just as with Navitas, Vertiv is competing with some heavyweight industrial companies, specifically Eaton and Schneider Electric. However, like Navitas, it is a pure-play company in the industry. The company was originally part of Emerson Electric but was sold to private equity in 2016, and then came to the market in 2020.
Image source: Getty Images.
While there are some understandable concerns about AI/data center stocks overheating, the drive toward the new generation of data centers promises to create an expansion in Vertiv's total addressable market. Wall Street analyst expectations are for mid-teens revenue growth through 2027, and with the next wave of 800V HVDC orders likely to happen in 2026 and then 2027, Vertiv looks set for substantial growth in the coming years.
