Data center equipment companies and Nvidia partner Vertiv Holdings (NYSE:VRT) can’t go wrong. The stock has risen an incredible 561% since the start of 2023 and is up another 20.5% in the week ending Friday morning, according to data from S&P Global Market Intelligence.
The latest move comes after Vertiv reported stellar first-quarter results that exceeded management expectations, raised full-year guidance and reported 60% organic order growth.
Vertiv’s growth dynamics
The company’s growth is driven by data center spending and, in turn, major investments in artificial intelligence (AI) applications. While it has become a popular theme among investors, Vertiv has a track record of order growth that supports this optimism.
Here are a few highlights from the quarter:
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Organic sales rose 8% to $1,639 million compared to guidance for a 5% organic increase.
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Adjusted operating income of $249 million compared to guidance of $210 million.
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The sales forecast for the full year was raised to 12% organic growth from the previous 10%.
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Full-year adjusted operating profit guidance was raised to $1.35 billion from $1.3 billion.
Frankly, it’s hard not to believe that management is taking a conservative approach to leadership. After all, first-quarter adjusted operating profit exceeded internal expectations by $39 million, and organic orders rose 60%. By comparison, management increased its full-year adjusted operating income by just $50 million.
There will be even more growth
In addition, CEO Giordano Albertazzi noted that “the majority of order overruns in the first quarter were due to deliveries after ’24.” Therefore, it can be assumed that investors will expect significantly higher profits in 2025. In fact, the stock received a number of analyst upgrades in the days following the results, with analysts citing the early-cycle nature of the AI spending boom.
Investors will hope they are right; If this is the case, the stock is likely to continue its remarkable run.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in Nvidia and recommends it. The Motley Fool has a disclosure policy.
Here’s why this Nvidia partner’s stock is up more than 20% this week. The article was originally published by The Motley Fool