Shares in data center equipment company Vertiv Holdings(NYSE: VRT) rose 10.7% in the week to Friday morning, accordingtodataprovidedbyS&P Global Market Intelligence. The stock is up nearly 500% over the last year and 70% in 2024 alone. Investors have warmed to the theme of investing in data center infrastructure on the back of burgeoning demand from artificial intelligence (AI) applications.
Vertiv's big news
This week's move follows the news that Vertiv has become a "Solution Advisor: Consultant partner" in Nvidia's partner network.
When asked about power delivery to its newest AI GPUs at Nvidia's GPU Technology Conference (GTC) this week, Nvidia CEO Jensen Huang said Nvidia and Vertiv engineers were "working on cooling systems" and that "Vertiv is very important in the supply chain of designing liquid cooled and otherwise data centers."
Vertiv's growing order book
The company is an important part of the growth of AI and data centers, as seen in its order book. Vertiv's organic orders rose 23% year over year in its recently reported fourth quarter, leading to a record backlog of $5.5 billion. Considering that figure, management expects 2024 sales to range from $7.515 billion to $7.655 billion -- with the midpoint representing a 10% organic increase.
Management expects its sales increase to leverage into operating profit growth of 23% in 2024. It's a hugely impressive set of numbers from a company that entered 2023 with some question marks following a disappointing 2022.
Image source: Getty Images.
While Vertiv's valuation may start to look stretched at 36 times estimated 2024 earnings, the AI investing boom appears to have legs, and investors should keep an eye on Vertiv's order book through the year for confirmation of ongoing growth.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
