Shares of Vertiv, a data center equipment company, saw an impressive increase of 19% in June, a trend influenced by positive market signals, particularly from its partner Nvidia, a leader in data center architecture. This surge in stock value coincides with a reduction in market anxiety about potential declines in data center capital expenditures.
While the bulls in the market assert that spending on data centers, especially linked to artificial intelligence (AI) demands, is still in the early stages of growth, the bears forecast a potential correction due to cyclical downturns often observed in the tech sector. The bears also express concerns regarding the flat year-over-year order book for Vertiv in the fourth quarter of 2024, which may indicate emerging challenges. However, the bulls counter these worries, pointing out Vertiv’s revised upward sales guidance for 2025, now estimated between $9.325 billion and $9.575 billion—an improvement over previous forecasts.
June brought optimism bolstered by Nvidia’s strong performance, particularly with a notable 73% year-over-year increase in data center revenue in its first quarter of 2026. While geopolitical issues, such as export control regulations affecting companies like Nvidia in their dealings with China, pose challenges, Vertiv remains insulated from these restrictions as its products are not subject to similar regulations. Nonetheless, it does face rising costs from sourcing materials from locations impacted by tariffs, specifically Mexico and China, highlighting an area where the company is taking measures to mitigate risks.
Overall, the underlying growth in the data center market and renewed investor confidence provide a promising outlook for Vertiv, which remains well-positioned to benefit from ongoing trends in data center and AI-related spending. As the tech landscape evolves, following developments in this sector will be crucial for investors seeking opportunities in the data center boom.