There's no denying that artificial intelligence (AI) stocks are in a funk. Microsoft's share prices are off nearly 30% from their late-October peak, for instance, while Palantir Technologies' stock price is down 25%. Investors are no longer sure the AI industry will live up to the hype or justify the investments already made.
As is so often the case, though, the market's made sweeping generalizations about a business when it should have been recognizing key differences among different parts of the industry -- or, for that matter, its individual companies.
While AI hardware and software names may be hitting a wall -- largely due to steep valuations -- the infrastructure providers are enjoying sustained demand that isn't going anywhere. And one of these names in particular is arguably even safer than the rest. That's Vertiv Holdings (VRT 5.25%). Here's why.
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What's Vertiv?
Don't sweat it if you've never heard of it. Most people haven't. With a market cap of only around $100 billion, it just doesn't turn many heads.
Nevertheless, it's a compelling investment despite the stock's continued run-up to record highs.
In simplest terms, Vertiv makes much of the equipment you'll find inside (and outside) modern-day data centers. Specifically, it offers power supplies, energy storage equipment, and, perhaps most importantly, cooling equipment, including in-rack refrigeration and liquid cooling solutions.
Heat is a big problem for data centers, especially AI data centers that are constantly doing a huge amount of computing work. Whereas Precedence Research predicts the worldwide data center cooling market will grow at an average annual pace of nearly 12% through 2035, industry research outfit Technavio expects the liquid cooling business specifically for AI data centers to expand by an average of more than 31% per year through 2029.
For its part, Vertiv's 2025 top line of $10.2 billion was up 26% year over year, and the company is calling for organic sales growth of around 28% this year.
NYSE: VRT
Key Data Points
Vertiv is seeing resilient demand
That's all impressive, to be sure. But why is Vertiv Holdings among the safest AI infrastructure stocks you can own here and now? Because its products are in demand, even if data center operators are postponing upgrades of their processors or holding off on the construction of new data centers, just to see if demand continues to grow.
See, data centers' operating costs have soared. Processing technology and the cost of electricity have jumped. Numbers analyzed by Bloomberg suggest wholesale energy prices are more than 3 times what they were just five years ago, forcing owners and operators to look for ways to curb these long-term costs even if it means making a steep upfront investment in equipment like Vertiv's.
This tailwind won't necessarily curb the volatility still surrounding most AI-related stocks like this one. As this year wears on, though, the market's apt to increasingly see that Vertiv's business growth is well-protected, even if other pieces of the AI industry aren't.
