ExploreVRT

VRT Vertiv

AI Infrastructure · Thermal / power for data centers

$248.11Fri, Oct 2, 2026, 8:02 AM EDTBefore market

Price

Daily adjusted close · last point is delayed last sale · drag the brush to zoom

1D+0.8%
1W-2.0%
1M-3.3%
3M-17.4%
6M-5.0%
YTD+53.2%
1Y+53.6%
2Y+143.1%
Statusinvestigate
Researchprimary verified
Market cap$94.75B
Updated8/15/2026
Revenue (qtr)$3.27B
FCF (qtr)$925.3M
Capex (qtr)$174.5M
Net debt$129.2M

Summary

Research status: Primary-source verified through Q2 2026. Valuation basis: $293.84 closing price on 14 August 2026.

Vertiv is the strongest operating business in the current portfolio but also the most visibly priced for sustained excellence. Q2 sales grew 24%, adjusted operating profit grew 51%, adjusted margin reached 22.6%, and management raised 2026 guidance to $13.8–14.2B revenue, 23.3–24.3% adjusted operating margin, $6.65–6.75 adjusted EPS and $2.4–2.6B adjusted FCF. At approximately 43.9x midpoint 2026 adjusted EPS, the thesis requires continued AI power/cooling content growth, strong execution and a premium terminal multiple. Hold as a high-quality AI-infrastructure position, but add only on estimate-confirming evidence or meaningful de-rating.

Thesis

Investment case

AI racks require far greater power density, thermal management and systems integration than conventional data-centre equipment. Vertiv supplies critical power, cooling, racks, services and controls across the facility-to-rack stack. Its installed base, engineering relationships, global service footprint and ability to validate integrated systems give it a strong position as customers move to liquid cooling and higher-density architectures.

The variant perception is that Vertiv's content per MW and service opportunity can rise fast enough for earnings to compound even as overall data-centre growth eventually normalises. The market already recognises this thesis: the central investment question is not whether demand is strong, but whether future earnings can exceed the high expectations embedded in the price.

Verified operating baseline

  • Q2 2026 net sales: $3.274B, up 24%; organic growth was 18%.
  • Adjusted operating profit: $738M, up 51%; adjusted margin 22.6%.
  • Adjusted EPS: $1.52, up 60%.
  • Q2 adjusted free cash flow: $925M; the company ended Q2 in a net-cash position with $5.6B liquidity.
  • 2026 guidance: $13.8–14.2B sales, 30–32% organic growth, 23.3–24.3% adjusted operating margin, $6.65–6.75 adjusted EPS, and $2.4–2.6B adjusted FCF.
  • Q3 guidance calls for 34–36% organic growth and a 24–25% adjusted operating margin.

Valuation scenarios

PowerFund scenarios based on $293.84 on 14 August 2026; dividends excluded.

24 months

CaseWeightCore assumptionsImplied valueReturn / CAGR
Bear25%$7.50 EPS; 25x P/E; orders normalise and multiple compresses$188-36.0% / -20.0%
Base50%$11 EPS; 35x P/E; sustained content growth with some multiple normalisation$385+31.0% / +14.5%
Bull25%$14 EPS; 45x P/E; liquid cooling and power systems exceed expectations$630+114.4% / +46.4%

Probability-weighted working value: approximately $397, or 16.2% annualised.

60 months

CaseWeightCore assumptionsImplied valueReturn / CAGR
Bear25%$10 normalised EPS; 22x P/E after capex-cycle maturity$220-25.1% / -5.6%
Base50%$18 EPS; 30x P/E; durable systems-and-service compounder$540+83.8% / +12.9%
Bull25%$28 EPS; 40x P/E; structural content and share gains persist$1,120+281.2% / +30.7%

Probability-weighted working value: approximately $605, or 15.5% annualised.

Catalysts

  • Q3 delivery near the 34–36% organic-growth and 24–25% adjusted-margin guidance ranges.
  • Sustained positive order growth and pipeline conversion into backlog and revenue.
  • Accelerating adoption of liquid cooling and high-density power architectures for next-generation GPU systems.
  • Expansion of service and controls revenue, improving recurring economics and customer stickiness.
  • Further adjusted-margin and free-cash-flow upside from productivity, price/cost and scale.
  • Evidence that recent acquisitions broaden rack-level content without reducing ROIC or balance-sheet quality.

Risks

  • Valuation: approximately 43.9x midpoint 2026 adjusted EPS leaves little tolerance for an ordinary growth slowdown.
  • Shared factor exposure: the same hyperscaler-capex shock would affect VRT, CLS, NVT and NBIS.
  • Order timing and cancellation: large, multi-phase projects create lumpiness and working-capital requirements.
  • Competition: Schneider Electric, Eaton, Delta, Johnson Controls, Trane and customer-designed systems can pressure share and economics.
  • Technology/content risk: more efficient architectures or customer standardisation could reduce Vertiv content per rack or per MW.
  • Execution: rapid capacity expansion, acquisitions and global supply-chain complexity can create delivery, quality and integration problems.
  • Margin normalisation: current productivity, mix and price/cost benefits may not persist through a slower demand environment.
  • Multiple compression: even correct long-term fundamentals may not protect the stock during a 6–12 month risk-off period.

Invalidation

Warning — investigate and freeze additions

  • Organic sales growth falls below 15% without a clearly temporary project-timing explanation.
  • Adjusted operating margin falls below 22%, pipeline language weakens, or working capital rises materially faster than sales.
  • Order growth turns negative, if disclosed, or backlog/pipeline conversion is repeatedly deferred.
  • Forward P/E remains above approximately 45x while EPS revisions flatten.

Reduce — normally trim 25–50%

  • Trailing order growth is negative or book-to-bill is below 1 for two reporting periods, if disclosed.
  • Full-year revenue or adjusted-EPS guidance is reduced by more than 10%.
  • Adjusted operating margin remains below 21% for two quarters despite continued data-centre growth.
  • Material liquid-cooling or power design wins shift to competitors, or acquisition/integration problems weaken FCF and ROIC.
  • Hyperscaler capex guidance turns down and Vertiv's own pipeline/order evidence confirms the slowdown.

Invalidate — exit unless a documented exception is approved

  • Organic growth remains below 10–12% for two quarters while orders/backlog also contract.
  • Persistent, evidenced market-share loss in liquid cooling, high-density power or integrated rack infrastructure.
  • A technology or customer-architecture shift structurally reduces Vertiv content per rack/MW.
  • Adjusted operating margin falls below 18–20% for several quarters without a credible temporary cause.
  • Balance-sheet or acquisition behaviour changes the thesis from high-quality organic compounder to leveraged roll-up.

Competitive notes

Vertiv's primary advantage is breadth across critical power, thermal management, racks, controls and global services, combined with close engineering work with chip, server and data-centre customers. Its service network and installed base create switching costs and help it participate across the infrastructure lifecycle.

Schneider Electric and Eaton have broader electrical portfolios and balance sheets; Delta has component and power-electronics scale; Johnson Controls and Trane compete in cooling; hyperscalers can also design or dual-source subsystems. Vertiv's differentiation is strongest where integrated, validated operation at extreme rack densities matters. The dossier should therefore track design wins and content per MW, not merely industry megawatts.

Next diligence

  1. Capture quarterly organic orders, backlog and book-to-bill whenever management discloses them; distinguish cancellations from project timing.
  2. Build an explicit content-per-MW bridge for power, liquid cooling, racks and services across current and next-generation GPU architectures.
  3. Compare VRT margins, valuation and growth with Schneider Electric and Eaton on a consistent accounting basis.
  4. Separate organic margin improvement from acquisition mix, price/cost and temporary working-capital benefits.
  5. Track top-customer concentration, large-project terms and fixed-price exposure from the 10-Q/10-K.
  6. Refresh scenario EPS and multiples after Q3 2026; do not add simply because the stock declines.

Next scheduled review: Q3 2026 results or an earlier hyperscaler-capex guidance change.

Reviews

Completed catalysts for this name. The full archive is on the Calendar past list.

  • Assess late-September PCE/GDP and deployment conditionsPrevious belief → new evidence → updated belief. Previous belief: after the 16 Sep FOMC, PowerFund was SLOW / SELECTIVE because the policy-rate path and real-yield hurdle had worsened, so correlated AI-infrastructure deployment required both fresh company evidence and greater valuation margin. New evidence: BEA's 30 Sep releases show August PCE prices +0.3% m/m and +3.4% y/y, core PCE +0.2% m/m and +3.0% y/y, while real PCE rose 0.6% m/m. Q2 real GDP was revised up to 2.2% annualized from 1.5%, with real final sales to private domestic purchasers +4.6%; consumer spending and investment were important contributors. Inflation is therefore improving at the margin, especially core monthly PCE, but demand/growth remain too firm to treat this as a clean rate-relief signal. Updated belief: MAINTAIN SLOW / SELECTIVE deployment rather than accelerate correlated AI-capex risk. The macro valuation hurdle has eased modestly but has not disappeared; price weakness alone remains insufficient for adds. Independent-factor opportunities remain eligible if their own evidence and valuation gates clear. No planned trade is created by this macro review. Sources: https://www.bea.gov/news/2026/personal-income-and-outlays-august-2026 ; https://bea.gov/news/2026/gdp-third-estimate-industries-corporate-profits-state-gdp-and-state-personal-income-2nd
  • Review September FOMC and deployment stanceCompleted 17 Sep 2026 after the Sep 15–16 FOMC. The Fed unanimously raised the target range 25 bp to 3.75–4.00%, its first hike since 2023. The September SEP shifted materially hawkish versus June: median appropriate fed funds is 4.1% at end-2026 (vs 3.8% in June), 4.1% at end-2027 (vs 3.6%), 3.9% in 2028 and 3.6% in 2029; the longer-run median rose to 3.2%. Sixteen of 18 submitted rate paths call for at least one further hike in 2026. The macro mix is stronger growth/labor plus stickier inflation: 2026 GDP median 2.3% vs 2.2% in June, unemployment 4.1% vs 4.3%, PCE inflation 3.7% vs 3.6%, core PCE 3.4% vs 3.3%; 17 of 18 participants see PCE inflation risks tilted upside and 15 of 18 see core-PCE risks tilted upside. Chair Warsh emphasized that underlying inflation trends have not meaningfully improved and declined to give forward guidance. Financial conditions remain restrictive: Sep 16 2-year Treasury yield rose ~7.5 bp to 4.738%, 10-year reached ~5.00%; the latest 10-year TIPS real yield before the meeting was ~2.62% on Sep 15; the dollar index rose ~0.63%. Equities weakened but AI/tech showed some resilience: S&P 500 -0.44%, Nasdaq essentially flat and semiconductors +0.6%. The implementation framework continues ample reserves and full rollover/reinvestment, so the tightening impulse is principally the higher policy-rate path rather than renewed balance-sheet runoff. PowerFund conclusion: MAINTAIN A SLOW / SELECTIVE DEPLOYMENT STANCE; do not accelerate correlated AI Infrastructure deployment. The long-term AI-capex thesis remains intact—Fed itself describes capital investment as robust and the growth outlook strengthened—but the discount-rate/real-yield hurdle has worsened and the 10-year near 5% means valuation discipline must tighten. Existing thesis-intact holdings remain holds; NBIS remains strict no-add without contract/financing evidence; SNDK remains deferred. Do not average down solely because AI names have fallen. New AI adds require both fresh company-specific evidence and a re-ranked expected return that compensates for the higher cost of capital. VRT's drop into the ~$235–240 area is now economically interesting but should trigger a refreshed dossier/opportunity ranking rather than an automatic add, especially given UIG acquisition integration/capital-allocation risk and the recent sector-wide debate about AI buildout pacing. Independent Defence/Robotics/Energy opportunities remain eligible if they clear their own gates. The late-September PCE/GDP review remains the next scheduled macro deployment gate. No trade or planned action is created by this macro review alone.
  • Assess August inflation before September FOMCCompleted 15 Sep 2026 using the Aug PPI/CPI releases and post-CPI market reaction. Aug PPI rose 0.4% m/m and 5.4% y/y; final-demand goods rose 1.1%, services 0.1%, and final demand less food, energy and trade services rose 0.3% m/m. Aug CPI rose 0.4% m/m and 3.4% y/y; core CPI accelerated to 0.3% m/m while easing only to 2.4% y/y. Shelter rose 0.3% m/m, services less energy services rose 0.3% m/m, transportation services 0.5%, and gasoline 3.9%. The print therefore did not meet the pre-release benign threshold needed to clear the rate/valuation gate. Market confirmation strengthened that conclusion: September Fed hike odds rose from roughly 72% before CPI to near 90% after the release; the 10-year Treasury subsequently crossed 5% on 14 Sep, while the dollar strengthened and oil remained above $100/bbl. Equities initially rallied on 11 Sep as oil eased, showing no immediate fundamental break in AI demand, but the broader discount-rate backdrop worsened and AI/tech remained vulnerable to valuation and factor pressure. PowerFund conclusion: SLOW new correlated AI Infrastructure deployment into the FOMC rather than accelerate. Keep existing thesis-intact holdings; do not average down solely because prices have fallen; require company-specific evidence and valuation margin for adds. NBIS remains no-add without contract/financing evidence. With cash ~90% of NAV there is no need to force deployment ahead of the 16 Sep FOMC. This review does not change the long-term AI-capex thesis; it raises the near-term cost-of-capital hurdle. The September FOMC review is the next macro deployment gate. No trade is created by this review alone.
  • Assess August jobs report and AI valuation pressureCompleted 5 Sep 2026 using the 4 Sep August Employment Situation and market reaction. Payrolls rose 162k versus ~56k expected; June was revised +11k to +31k and July +44k from -23k to +21k, lifting the two-month total by 55k. Unemployment held at 4.1%; participation edged up to 61.6%; the workweek rose 0.1 hour to 34.4. Average hourly earnings rose 0.3% m/m and 3.1% y/y, the latter easing from July and limiting the wage-inflation signal. Markets nevertheless treated the report as reducing near-term rate relief: the 2-year Treasury yield rose roughly 4–5 bp to ~4.37–4.38% after briefly reaching ~4.42%; the 10-year finished near 4.78%; the dollar index rose ~0.2%; S&P 500 fell 0.38% and Nasdaq 0.29%. September Fed hike odds rose intraday into the ~60% area before easing somewhat. PowerFund conclusion: labor resilience is positive for end-demand and does not weaken the AI-capex thesis, but it raises the discount-rate hurdle and leaves CPI/PPI as the decisive near-term macro gate. Maintain, do not accelerate, AI Infrastructure deployment. Existing positions remain unchanged; do not chase rebounds; keep SNDK deferred and require company-specific valuation/fundamental evidence for any adds. The already-scheduled Aug CPI/PPI review remains the next macro decision gate.
  • Assess AI/semi correction after Jackson HoleCompleted after Jackson Hole 2026 and the Aug. 28 market reaction. Chair Kevin Warsh said the 2% PCE target is firm and that the Fed must be confident underlying inflation is moving clearly and sufficiently quickly toward target or 'we have work to do.' He described labor markets as stable, output as solid, AI-related capex as a major driver of investment, and medium-term inflation expectations as broadly anchored, but emphasized that inflation remains too high and avoided dovish forward guidance. Markets interpreted the speech as hawkish: rate-hike expectations increased and U.S. equities finished lower. Conclusion for PowerFund: the AI/semiconductor fundamental demand thesis is strengthening, but the valuation/rates headwind has not cleared. Maintain—not accelerate—AI Infrastructure deployment. Keep existing CLS, VRT, NVT and NBIS positions at current sizing; no averaging down in NBIS without contract-level evidence. Favor selective entries/adds only when company-specific evidence is strong and valuation offers a margin of safety. CRDO remains gated to its own earnings; ANET/NVDA remain high-quality but valuation-sensitive. The current AI Infrastructure sleeve is only ~5.6% of NAV and cash is ~92%, so there is ample capacity to deploy later without forcing purchases into a still-hawkish rates backdrop.
  • Review NVIDIA Q2 FY27 earnings and reassess AI deploymentNVIDIA Q2 FY27 materially supports the view that the recent AI/semi selloff has been driven primarily by factor/valuation compression rather than a break in AI infrastructure fundamentals. Q2 revenue was $96.2B (+106% YoY, +18% QoQ), Data Center revenue $89.0B (+117% YoY, +18% QoQ), and Q3 revenue guidance is $108B ±2% despite assuming no Data Center compute revenue from China. Vera Rubin is now in full production, with racks running at CoreWeave, Google Cloud, Microsoft Azure, Oracle Cloud Infrastructure and Nebius; Spectrum-6 systems are arriving at gigascale AI factories. These points reinforce ongoing demand for compute, networking, power/cooling and data-center systems relevant to VRT, NVT, CLS, ANET, CRDO and NBIS. The principal caution is valuation/expectation risk: Q3 gross margin is guided to 74.0% ±50bp versus 75.0% in Q2, while investors remain sensitive to the sustainability and financing of AI capex. NVIDIA also announced financing partnerships intended to mobilize >$500B of third-party capital, which supports buildout capacity but increases the need to distinguish genuine end-demand from financing-supported expansion. Portfolio conclusion: lift the temporary blanket pause on correlated AI/semi deployment that was imposed pending NVIDIA, but do not mechanically average down. AI/semi names are again eligible for normal opportunity ranking and the pre-buy integrity gate; CRDO remains gated until after its 1 September earnings, NBIS remains not addable pending post-financing per-share analysis, and any SNDK/VRT/NVT/CLS action still requires current prices plus company-specific evidence. Existing holdings remain HOLD; no individual thesis invalidation or trim signal is triggered by NVIDIA's results.
  • Assess PCE/GDP reaction before NVIDIAJuly PCE/Q2 GDP review completed before NVIDIA earnings. Inflation was modestly hotter/stickier than ideal and Treasury yields remained elevated, raising the discount-rate hurdle for valuation-sensitive AI Infrastructure. However, the equity reaction was contained and there was no macro evidence that the underlying AI-capex cycle had weakened. Maintain the temporary pause on new correlated AI/semi deployment until NVIDIA provides the fundamental demand read-through; independent Defence, Energy, and Robotics/AI opportunities remain eligible. No portfolio decision change was required from this macro review alone.