NVIDIA deal fuels 5% spike for this AI data center stock

This stock is getting some love from Wall Street.

Vertiv Holdings (NYSE: VRT) stock was on the move Monday after it struck a deal with AI leader NVIDIA (NASDAQ: NVDA) and got a massive analyst upgrade.

Vertiv is a company that makes equipment for data centers, putting it right in the center of this growing industry. Not only that — the company specializes in the equipment and infrastructure needed to run next-generation data centers, which are designed to more efficient than the current models.

The recent deal with NVIDIA, announced last week, is a big win for Vertiv. The company will provide its energy-efficient 142kW cooling and power reference architecture for the NVIDIA GB300 NVL72 platform.

Vertiv’s SlimReady reference architecture can be customized for different data center designs, allowing customers to deploy more efficient data centers that are built to handle the demands of AI.

“Building upon our strong collaboration with NVIDIA and a shared vision to advance AI infrastructure, Vertiv is proud to release our comprehensive reference design and SimReady 3D assets for the NVIDIA GB300 NVL72 platform,” Scott Armul, executive vice president of global portfolio and business units at Vertiv, said. “Vertiv solutions allow customers to not only scale faster, but to optimize their AI-focused data centers digitally before a single physical module is built.”

Wall Street analyst boosts price target

Vertiv stock got an added lift on Monday when analysts at Citi raised their price target for Vertiv by $32 to $130 per share. Vertiv stock is currently trading at $117 per share after Monday’s gains, so a $130 per share price target would represent an 11% return over the next year.

That follows a recent upgrade by Evercore to $150 per share, which would suggest 28% upside. Vertiv currently has a median price target of $120 per share, which is only about 3% higher than it was on Monday.

Analysts at Citi said Vertiv is well-positioned to grow with the data center industry, reported Investing.com. Citi estimates that data center demand will grow at a compound annual growth rate of 14% through 2030 and that should provide some nice tailwinds for Vertiv as a leading provider of next-generation infrastructure.

In the Q1 earnings report, Vertiv raised its guidance for fiscal year 2025, calling for net sales of between $9.325 billion and $9.575 billion, which would be up more than 45% from the previous year. Adjusted earnings are targeted for $3.45 to $3.65 per share, which would be up some 21% to 28% from the previous year.

In their first quarter report, portfolio managers at the Baron Small Cap Fund were bullish on its prospects.

“We believe Vertiv maintains its competitive advantage and will benefit from increased capital spend and the complex roadmap related to new chip introductions, which will run hotter and require more advanced cooling solutions. We believe the stock is attractively valued in the context of its long-term growth potential,” portfolio manager Cliff Greenberg wrote in his Q1 letter to shareholders.

Vertiv is trading at 64 times earnings, but 31 times forward earnings. And longer term, it has a low P/E-to-Growth ratio of below 1, which suggests a value relative to its long-term earnings potential.