Vertiv (VRT): Reassessing Valuation After Caterpillar Alliance and Billion-Dollar AI Data Center Expansion

Vertiv Holdings Co (VRT) just doubled down on the AI data center boom by pairing a new Caterpillar alliance with a billion dollar cooling acquisition and upbeat guidance that points to accelerating demand across its infrastructure portfolio.

See our latest analysis for Vertiv Holdings Co.

That backdrop helps explain why Vertiv’s share price has climbed sharply in recent quarters, with a 90 day share price return of 44.26 percent and a three year total shareholder return above 1,160 percent. This performance signals powerful, still building momentum behind the AI infrastructure story.

If Vertiv’s run has you thinking about what else could ride the next wave of digital infrastructure demand, it is worth exploring high growth tech and AI stocks as a curated way to uncover more ideas.

Yet with the stock already up more than elevenfold in three years and now trading only modestly below analyst targets and some intrinsic estimates, is Vertiv still mispriced, or is today’s valuation already discounting years of AI fueled growth?

Most Popular Narrative: 8.1% Undervalued

With Vertiv last closing at $178.88 against a narrative fair value near $194.63, the most followed view points to upside that still hinges on aggressive growth and margin expansion assumptions.

In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 35.6x on those 2028 earnings, down from 59.0x today. This future PE is greater than the current PE for the US Electrical industry at 33.7x.

Read the complete narrative.

Want to see the math behind that higher earnings multiple and rich fair value? The narrative leans on powerful revenue growth and a profit reset that could transform Vertiv’s earnings profile. Curious which assumptions really carry the weight in this story and how sensitive the valuation is if they slip even slightly? Dive into the full narrative to unpack the exact forecasts driving that upside case.

Result: Fair Value of $194.63 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still real execution risks, ranging from ongoing supply chain disruption to potential hyperscaler vertical integration, that could quickly undermine these ambitious margin assumptions.

Find out about the key risks to this Vertiv Holdings Co narrative.

Another Way to Look at Value

On simple earnings comparisons, Vertiv looks stretched, with a price to earnings ratio of 66.1 times versus 31.2 times for the US Electrical industry and 37.4 times for peers, and even above a fair ratio of 57.8 times. That premium suggests little room for execution missteps, so how comfortable are you paying up for perfection?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Vertiv Holdings Co Narrative

If this perspective does not fully align with yours, or you would rather dig into the numbers independently, you can shape a custom view in under three minutes, Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Vertiv Holdings Co.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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