Shares of data center infrastructure leader Vertiv Holdings (VRT -0.36%) rallied 18.3% in April, according to data from S&P Global Market Intelligence.
Vertiv, like most artificial intelligence stocks, had sold off to start the year and took another leg down after April 2 “Liberation Day.”
However, the stock recovered along with other tech names as the Trump administration hinted it would likely relax tariffs as trade deals are struck. Additionally, the company reported better-than-expected first-quarter earnings and raised full year guidance, even in the wake of the tariff announcement. That sent investors cheering the formerly loved AI stock once again.
A strong earnings report and confident guidance hike
In the wake of the April 2 “reciprocal” tariff announcements and subsequent market plunge, investors likely didn’t expect any company to give robust 2025 guidance in light of all the uncertainty.
However, that’s just what Vertiv did. Not only did its 24.2% revenue growth and 49% adjusted (non-GAAP) EPS growth beat analyst’s expectations, but the company also raised its revenue guidance for the full year, from a midpoint of $9.2 billion to a new midpoint of $9.45 billion. While orders were only up 13%, they can be lumpy quarter to quarter. Overall, the company’s book-to-bill ratio was still well above 1, at 1.4, and backlog increased 10% just relative to Dec. 31, implying 40% annualized backlog growth.
So, while the lingering tariff concerns and the emergence of ultra-efficient Chinese LLM DeepSeek R1 led to concerns over the strength of the AI infrastructure buildout, it doesn’t appear that Vertiv is seeing any slowdown whatsoever. That sentiment was also echoed by other Magnificent Seven companies in their earnings calls last week, all of whom either maintained or increased their data center investment plans for the year.
Vertiv’s management touted its investment in supply chain flexibility over the past few years as giving it the ability to mitigate tariffs, while also highlighting its customized and prefabricated AI data center solutions. The company also highlighted its close partnership with Nvidia (NVDA -0.64%) and Vertiv’s reference designs for the GB200 (Grace Blackwell) and upcoming GB300 systems as bolstering its full-year optimism.
Image source: Getty Images.
Vertiv continues to be an AI winner
As long as large cloud and neocloud companies continue to invest in AI infrastructure, Vertiv should continue to see healthy growth. While the company doesn’t appear super-cheap on the surface, its 26.7 forward P/E multiple also doesn’t look especially high, as long as the AI infrastructure buildout sustains over the next few years.
While naysayers have been doubting the two-year old AI infrastructure boom recently, there really hasn’t been any word from major cloud, neocloud, or AI semiconductor companies that there’s any hint of a slowdown. Investors in Vertiv should therefore have their own independent outlook on the AI buildout, and how long it is likely to last. That will determine whether this stock is a buy today after its April surge.
Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.