Scry Fund

Investment Memo

Vertiv Holdings Co. (NYSE: VRT)

Equity analyst investment memo

31 May 2026 · YK Research

Contents

  1. Investment Stance
  2. Executive Summary
  3. Business Overview
  4. Valuation Read
  5. Ownership
  6. What To Watch

Investment Stance: Neutral / Hold

“Vertiv is a quality AI-infrastructure business. The problem is not the business. The problem is that the stock already prices in a lot of the quality. Buy it on pullbacks, not after the multiple has done the easy work.”
YK Research
Recent price
$315.71
Market cap
$123.8B
Base-case fair value
~$340/sh
Stance
Neutral / Hold

Vertiv is one of the cleanest public-market ways to underwrite AI data-center power, thermal management, and mission-critical infrastructure. The company sits directly on three linked bottlenecks: power delivery, heat removal, and speed of deployment. That is a real structural setup.

The issue is valuation. At the quoted price of $315.71 and market cap of about $123.8B, VRT trades around 50x FY2026 guided adjusted EPS midpoint, about 9.0x FY2026 sales midpoint, and about 56x FY2026 adjusted FCF midpoint. My base case gets to roughly $340/share fair value, which leaves limited upside unless Vertiv keeps beating/raising or investors keep paying premium AI-infrastructure multiples.

Executive Summary

  • Company: Vertiv provides power, cooling, IT infrastructure, integrated modular solutions, software, and services for data centers, communication networks, and commercial/industrial customers.
  • Core thesis: AI data centers require denser power and cooling architecture than traditional compute. Vertiv is levered to power delivery, heat removal, and faster deployment.
  • Demand backdrop: The IEA projects global data-center electricity consumption to roughly double from 2025 to 2030. AI-focused data-center electricity consumption is expected to triple.
  • Market size: Dell’Oro Group projects the data-center physical infrastructure market will surpass $80B by 2030, with thermal management growing around 20% CAGR and direct liquid cooling surpassing $8B by 2030.

Fundamental Momentum

2025 sales growth
+27.7%
Q1 2026 sales growth
+30%
Adj. op margin
20.8%
Margin expansion
+430 bps
  • Management raised FY2026 guidance to $13.5-14.0B of revenue.
  • Organic growth guidance is 29-31%.
  • Adjusted EPS guidance is $6.30-6.40.
  • Adjusted free cash flow guidance is $2.1-2.3B.
Sources referenced in memo draft: Vertiv FY2025 and Q1 2026 company disclosures.

Business Overview: Not Just a Cooling Stock

Vertiv is a mission-critical infrastructure supplier across the data-center stack. Its product set includes AC and DC power management, thermal management, switchgear, busbar, air- and liquid-cooled thermal products, integrated modular solutions, energy storage, and monitoring/software.

AreaRelevance to AI data centers
Power managementAI clusters require higher and more reliable power density. Vertiv sells AC/DC power management, switchgear, busbar, and related infrastructure.
Thermal managementGPU racks create higher heat loads, driving demand for liquid cooling, air-liquid hybrid cooling, and precision thermal management.
Integrated modular solutionsHyperscalers and colocation providers need faster deployment timelines. Prefabricated modular infrastructure can reduce time-to-capacity.
Services and sparesInstalled base creates lifecycle revenue from maintenance, replacement, and uptime-critical service contracts.

In 2025, Vertiv generated $10.23B of net sales, up 27.7% year over year. By region, the Americas represented $6.39B, APAC $2.02B, and EMEA $1.82B. The Americas were the strongest region, growing 41.9% in 2025 and delivering 26.8% operating margin.

Q1 2026 reinforced the same pattern: strong AI data-center demand, improving operating leverage, and management willing to raise full-year expectations.

Bear case

Great company, wrong price. AI-infrastructure demand stays strong, but order normalization, backlog conversion risk, margin pressure, or multiple compression caps returns. A 50x forward EPS multiple leaves little room for disappointment.

Base case

Vertiv executes, converts the $15.0B backlog over the next 12-18 months, keeps margins around the low-20s adjusted operating range, and earns the premium. Fair value: roughly $340/share.

Bull case

Backlog keeps building, liquid cooling adoption accelerates, AI data-center capex stays stronger for longer, and management keeps beating/raising. The stock needs either higher earnings or a persistent premium multiple to work from here.

13F Angle

VRT is widely institutionally owned. Fintel shows 1,855 institutional owners/shareholders and about 356.0M shares held by institutions. Major holders include Vanguard, BlackRock, State Street, Geode, Bank of America, Price T. Rowe, Morgan Stanley, Invesco, JPMorgan, UBS, FMR, and others.

Source referenced in memo draft: Fintel institutional ownership data.

What To Watch

  • Backlog quality: Backlog reached $15.0B at year-end 2025, up from $7.2B a year earlier. Management cautions that backlog can be canceled or rescheduled, but says most backlog is firm and expected to ship over the next 12-18 months.
  • Liquid cooling: Direct liquid cooling is the cleanest product-level proof that AI density is changing Vertiv’s content per rack.
  • Margin durability: The stock needs operating leverage to keep showing up. If growth is real but margins stop expanding, valuation support weakens.
  • Multiple risk: At roughly 50x FY2026 adjusted EPS, this is a hold unless the stock pulls back or the estimate base moves up.