"AI liquid cooling leader" Vertiv's financial report exceeds expectations across the board. JPMorgan: Despite the huge surge, data center demand has accelerated from 'lightspeed' to 'absurd,' and the valuation remains reasonable.

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Author of this article: Long Yue

Source: Hard AI

As a key supplier of power and cooling solutions for data centers, Vertiv is riding the AI wave into an unprecedented growth fast track.

The latest third quarter results announced by "AI liquid cooling leader" Vertiv show that key indicators such as its sales, profit margin, and earnings per share all achieved better-than-expected growth. Sales reached $2.676 billion, a year-on-year increase of approximately 28%, surpassing the upper limit of the company's guidance. Adjusted earnings per share stood at $1.24, far exceeding the generally expected market range of $0.94 to $1.00.

Even more strikingly, according to a report by JPMorgan released on October 23, Vertiv's new quarterly orders skyrocketed by about 60% year-on-year, with the book-to-bill ratio rising to 1.4, pushing the total backlog to a record $9.5 billion. This strong momentum prompted the bank to raise Vertiv's target price from $206 to $230 and maintain an "overweight" rating.

JPMorgan stated that Vertiv's performance, especially the strong momentum in orders and backlog, was the highlight of the earnings report. The bank's analyst C. Stephen Tusa, Jr pointed out that the data center demand cycle seems to be evolving from "light speed" to "ludicrous speed".

JPMorgan: Huge upside, 2027 performance may exceed consensus by 50%

Analysts believe that although Vertiv's stock price has risen sharply this year, its risk-reward ratio remains extremely attractive.

The company's large backlog provides a solid foundation for performance in the coming years. JPMorgan's analysis model shows that although its EPS forecasts for Vertiv in 2026 and 2027 are already 15-20% higher than the market consensus, they see a "reasonably optimistic scenario".

In this scenario, based on the company's large backlog and continued strong project pipeline, its EPS in 2027 could reach $9, which is 30-50% higher than current market consensus.

High but reasonable valuation, growth prospects are key

Vertiv's stock price has performed well over the past year, and its valuation is at a relatively high level in the industry. However, JPMorgan believes this premium is reasonable.

The report analyzes that in terms of the price-earnings-to-growth ratio, considering its industry-leading growth prospects, Vertiv's valuation is still "one of the cheapest".

JPMorgan emphasizes that market consensus may still underestimate Vertiv's growth potential. The bank points out that based on its own forecasts, Vertiv's P/E for 2026/2027 will be 31x/25x, already lower than the market consensus of 36x/31x; and in its optimistic scenario, the P/E will drop to 28x/20x, making the valuation even more attractive.

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