Vertiv, a supplier of power and cooling systems for data centers, is emerging as one of the main beneficiaries of the AI boom, delivering 24% year-over-year revenue growth and heading toward $22 billion in revenue by 2028.
The company is positioned to capitalize on a critical bottleneck: U.S. power utilities are expected to fall short by more than 230 gigawatts of new generating capacity over the next five years, forcing hyperscalers to invest heavily in Vertiv's efficiency solutions to maximize compute output from limited electricity.
What happened
Vertiv, which supplies power and cooling systems for data centers, reported 24% year-over-year revenue growth in the second quarter. The company's trailing-12-month revenue has nearly doubled to $11.5 billion over three years, and analysts expect revenue to approach $22 billion by 2028.
Why it matters
Data centers expanding to support AI face a severe power shortage—the U.S. will need more than 230 gigawatts of new generating capacity over the next five years, more than double what utilities are expected to deliver. Vertiv's technology helps hyperscalers extract maximum efficiency from limited power, making it a direct play on AI infrastructure investment that has been overlooked compared to chip stocks. The company's adjusted operating margin is projected to expand from about 20% in 2025 to 23.8% at the midpoint of full-year 2026 guidance, supporting accelerating earnings growth.
What to watch
Analysts project roughly 37% annualized earnings growth over the next several years. Vertiv competes with larger players like Schneider Electric and Eaton, but maintains switching costs—once a data center installs its power systems, replacing them is costly and time-consuming, effectively locking in customers.
Vertiv Holdings has emerged as one of the primary beneficiaries of the AI data center build-out, yet remains less recognized than semiconductor companies despite delivering robust growth. The company supplies power and cooling solutions to data centers and other markets, and its revenue has nearly doubled to $11.5 billion over the past three years. In the second quarter alone, Vertiv reported 24% year-over-year revenue growth, with analysts now projecting revenue approaching $22 billion by 2028.
The article identifies a critical constraint driving demand: a looming U.S. electricity shortage. Bank of America analysts project the country will require more than 230 gigawatts of new generating capacity over the next five years—more than double what utilities are expected to deliver. This gap forces hyperscalers (large cloud providers) to invest not only in chips but in power management systems that extract maximum efficiency from limited electricity. Executive Chairman Dave Cote stated: "We see a demand environment that continues to grow, and we continue to invest ahead of it—planting seeds now that we expect to compound for years to come." That efficiency drive is already translating to margin expansion: Vertiv's adjusted operating margin in 2025 was about 20%, and full-year 2026 guidance implies 23.8% at the midpoint. As revenue scales, the company can spread fixed costs across a larger base, supporting accelerating earnings growth. Wall Street projects roughly 37% annualized earnings growth over the next several years.
The stock trades at a forward price-to-earnings ratio of 41, which the article argues is justified by the earnings trajectory. Vertiv faces competition from larger players like Schneider Electric and Eaton, but maintains a durable competitive advantage through switching costs: once a data center installs Vertiv's power systems, replacing them is time-consuming and expensive, effectively locking in the customer. As AI adoption deepens and chip configurations in data centers become increasingly complex, the demand for advanced thermal management will likely intensify, positioning Vertiv as a core infrastructure beneficiary of the AI boom.
The AI boom has spotlighted semiconductor and memory stocks, but the article argues that power management—a less visible constraint—may offer equal or greater investment opportunity. Data centers expanding at scale to support AI chips face a fundamental bottleneck: the U.S. electricity grid cannot keep pace with demand. Bank of America analysts project a shortfall of over 230 gigawatts of new generating capacity over five years, forcing hyperscalers to maximize efficiency from existing power supplies. Vertiv addresses this constraint directly by selling power and cooling systems that squeeze more compute output per watt, explaining its consistent 20%-plus quarterly revenue growth. The company's trailing-12-month revenue has nearly doubled to $11.5 billion in three years, and Wall Street expects further growth to nearly $22 billion by 2028.
Vertiv's margin expansion reinforces the case for upside. Adjusted operating margin is forecast to rise from about 20% in 2025 to 23.8% by full-year 2026, as the company spreads fixed costs across a growing revenue base. Analysts project roughly 37% annualized earnings growth over the next several years, which the article argues justifies the stock's forward price-to-earnings ratio of 41. A structural moat—switching costs and the expense of replacing installed power systems—protects Vertiv against larger competitors like Schneider Electric and Eaton. As AI adoption accelerates and chip density in data centers increases, demand for advanced thermal management will likely intensify, reinforcing Vertiv's position as a core infrastructure play.
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