Just when you thought the Semiconductor/AI data center capital spending boom was slowing down, the South Korean government just announced a government/corporate plan to invest more than $1 trillion in semiconductor fabrication plants and AI data centers. That's great news for companies like Vertiv (VRT 3.51%), whose power systems infrastructure technology lies at the heart of the data center buildout. The news was enough to send Vertiv stock 7% higher by midday today.
What South Korea just announced
The spending is driven by the corporate sector, which accounts for the bulk of it. Samsung and SK Hynix will invest about $518 billion in new semiconductor fabrication plants, while SK Group (parent of SK Hynix), GS Group, and Naver will invest about $356 billion in AI data centers. It's the latter that will interest Vertiv investors, given its direct exposure to AI data center spending.
NYSE: VRT
Key Data Points
What it means to Vertiv
Vertiv generates about 20% of its sales in Asia and has an active presence in South Korea. While Vertiv doesn't have formal partnerships with the three companies investing in the data centers, it's linked to Naver through Naver's partnership with Nvidia. In fact, Nvidia's CEO, Jensen Huang, described Naver as being a key partner in the global AI ecosystem. Vertiv is one of the key stocks to buy for exposure to the AI data center boom.
Image source: Getty Images.
Given that Vertiv's power systems are embedded in Nvidia's architecture, Vertiv is likely to benefit from Nvidia's spending plans. Optimism on that front was enough to send the stock higher, and investors and analysts will likely start penciling in increased orders for Vertiv after this news flow.
