Vertiv Stock Up 27%. Google, Meta, Microsoft AI Spend To Drive Growth

Forbes

7 days ago

Vertiv stock is up 27% this year after posting second quarter that beat and raising the company's forecast, according to Investor's Business Daily.
A big reason for the company's success is the ever rising capital expenditures of companies like Alphabet, Amazon, Meta, and Microsoft, reported the Wall Street Journal. Vertiv supplies hyperscalers hardware and services to power and cool the data centers where chatbot providers like OpenAI train and operate their AI models, according to my book Brain Rush.
While Vertiv also supplies such infrastructure to other customer groups – such as communication networks and commercial and industrial facilities – AI is the source of the fastest growth, according to my July 30 interview with Vertiv CEO Gio Albertazzi.
Vertiv's future prospects look bright for two reasons:
To be fair, Vertiv shares could have limited upside. How so? A survey of 15 Wall Street analysts reveals an average 12 month price target of $144 – making the stock 4% overvalued, according to TipRanks.
Vertiv's Performance And Prospects
Vertiv's second quarter results exceeded investor expectations and the company raised its full year outlook, according to IBD.
Here are the key numbers:
"Vertiv's second-quarter performance demonstrates the strength of our market position and our ability to execute at scale," Albertazzi said in a news release. 'Our 35% sales growth and robust orders momentum reflect both strong market demand and our expanded capabilities to serve our customers' increasingly complex infrastructure needs.'
Vertiv's Growth Tailwinds
Vertiv's 35% sales growth is more than three times faster the industry's expected rate of expansion. The company's competitive advantages suggest the company to win market share.
How so? Vertiv's total addressable market – providing hardware and services for data centers, communications, and commercial and industrial customers – amounts to $60 billion and is growing at a 9% to 11% annual rate, according to Albertazzi.
The data center segment – featuring hyperscalers (such as AWS and Microsoft's Azure cloud), neo cloud providers (such as CoreWeave), and data center companies like Equinix – is growing at a 15% to 17% annual rate, he added.
Before July 30, when they reported expectations-beating quarterly growth, both Meta and Microsoft 'were already on track to spend more than 30% of this year's revenue on capital expenditures, compared with about 15% to 20% historically,' the Journal reported.
Meta and Microsoft seem to have different plans for spending. In pursuit of 'superintelligence', Meta CEO Mark Zuckerberg is making a 'massive investment,' noted the Journal. that will take years to ultimately come to fruition.
He expects it will take years for the investment to pay off. 'We do take very seriously that this is just a massive amount of capital to convert into many gigawatts of compute, which we think is going to help us produce leading research and quality products and in running the business,' Zuckerberg said on Meta's earnings call.
For its part, Microsoft projected record capital expenditures of $30 billion for the current quarter although the software giant envisions slower spending growth in the year ending June 2026 than in 2025, according to the Journal.
Vertiv sees such hyperscaler capital expenditure growth for AI as sustainable. 'By investing in more capacity – which gives hyperscalers an advantage – they are implicitly confirming their expectations for monetization,' Albertazzi told me.
Vertiv is using AI to grow revenue faster than fixed costs. How so? The company's AI applications include configuring its supply chain, executing tariff countermeasures, improving the company's overall efficiency, and speed and providing long-term value to customers, he explained.
Vertiv provides a range of hardware and services. Roughly a third of the company's revenue comes from cooling technology – such as liquid cooling systems about which I wrote in Brain Rush; a third from power management technology; and 22% from services to speed data center deployment, according to Albertazzi.
Vertiv wins because of its role as an industry thought leader – which enables the company to create the future. 'We are part of an industry ecosystem including silicon providers like Nvidia and hyperscalers," he said.
"Our engineers work with their engineers to design data centers for the future. We also respond to requests for proposal and request for quotations. There are transactions but also collaboration. We are in the fabric, in the loop. We have a track record throughout the life cycle.'
Vertiv's Sources Of Future Growth
Vertiv expects strong growth as evidenced by the following metrics from the company's Q2 2025 investor presentation:
Vertiv sees many new growth vectors as customers deploy new technologies. 'Growth will come from cooling, power management, white spaces within IT, and digitization of predictive maintenance,' Albertazzi explained.
'Demand for liquid cooling is in its infancy. There is growing demand for data center access to power that is grid independent. We are collaboration with Oklo to deploy small nuclear reactors – which take much less time to deply than traditional nuclear plants. We will provide hardware to meet the power requirements of new graphics processing units such as Nvidia's Rubin. And we will help design and build data centers using prefabrication to reduce deployment time,' he added.
As Nvidia and rivals introduce new GPUs, their computational power and energy consumption rise. 'A rack with the latest AI chips requires the same power as 10 to 15 racks at a conventional site,' according to the Financial Times.
Wall Street analysts saw Vertiv's stock as overvalued, noted my January 2025 post on Forbes. Yet it has continued to rise. Satisfying the ever increasing power and cooling needs of AI data centers may continue to send Vertiv's stock ahead of investor expectations.