Shares in data center equipment company and Nvidia partner Vertiv Holdings (VRT -0.59%) rose by 13.4% in July, according to data provided by S&P Global Market Intelligence. The move comes in a month when the company released an excellent set of second-quarter earnings, raised full-year guidance across the board, and confirmed that the artificial intelligence (AI)/data center capital spending market has a long pathway of growth ahead.
Vertiv's hot second quarter
Earlier in the year, the market had, understandably, been concerned that the data center infrastructure stocks had gotten ahead of events. A combination of trade tariff uncertainty, power generation concerns, the regulatory environment in Europe, and the usual concerns over a hot market overheating led to the sell-off in the stock.
Despite the rise since then, the concerns still linger, not least as companies like Nvidia face controls on what technology they can sell to China. Fast-forward to the latest results from Vertiv, and it's clear that there's no sign of any slowdown in the market. Vertiv's trailing-12-month orders rose 11% compared to the same period a year ago. Moreover, its European orders pipeline (the company's weak spot in the fourth quarter of 2024) is growing sequentially, "providing optimism for 2026 and beyond," according to CEO Giordano Albertazzi on the earnings call.
Turning to the guidance hike, tariffs are hurting margins, but that's more than made up for by stronger-than-expected revenue growth. For example, management increased the midpoint of its full-year net sales guidance to $10 billion compared to $9.45 billion previously. However, management lowered the midpoint of its full-year adjusted operating profit guidance to 20% from 20.5% previously. The end result is that adjusted operating profit guidance was increased to $1.99 billion from $1.935 billion previously.
Image source: Getty Images.
Vertiv isn't standing still
The good news is the company continues to invest in its future. That's pretty much what you might expect with David Cote (a 15-year CEO of Honeywell, responsible for its growth transformation) as chairman. Not only is Vertiv increasing its investment in research and development, but it's also acquiring Great Lakes Data Racks & Cabinets, a data center rack enclosure business, for $200 million, further enhancing its strength in power and cooling systems.
In addition, it is a key partner of Nvidia in developing the architecture for the next generation of data centers (800V HVDC), set to hit the market in 2027. The future remains bright for Vertiv.
