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Over the past several years, data center power and thermal management stock Vertiv (NYSE: VRT) one of the hottest names in the market. Since the beginning of 2024, Vertiv shares are up more than 500%, and this stock is continuing its remarkable performance in 2026. In 2026, shares are already up more than 100%.

This comes despite Vertiv selling off slightly after its latest earnings report, falling by more than 2%. However, the stock recovered the next day significantly, rising more than 5%.

While Vertiv has already seen big-time gains, its impressive financial performance and the strength of the data center buildout are powerful dynamics supporting its outlook.

Vertiv Crushes EPS Estimates, Boosts Guidance Substantially

In its latest quarter, Vertiv posted impressive growth of just over 30% year over year (YOY), with revenue coming in at $2.65 billion. This slightly beat estimates of $2.63 billion. The company’s adjusted earnings per share (EPS) of $1.17 was particularly noteworthy. The figure rose by 83% YOY and handily beat estimates of $1. Adjusted free cash flow ballooned by 147% to $652.8 million.

Vertiv also significantly raised its full-year guidance. The company now expects to generate midpoint sales of $13.75 billion and midpoint adjusted EPS of $6.35. These figures are $250 million and 33 cents higher than Vertiv’s past outlook, respectively.

Vertiv’s most important geographic region is the Americas, and the company continued to perform very well there. Americas sales growth of 53% led, with the region contributing 68% of total sales. Notably, the company saw diversified growth across all its product lines in the Americas.

However, Asia Pacific was a bit of a letdown, growing by 15%, which was below guidance. However, this was simply due to revenue timing, indicating that missed sales will flow through to future quarters.

Additionally, Vertiv’s net debt, or debt minus cash, fell by 50% in just one quarter to less than $700 million. The company’s net leverage also fell to 0.2X. In other words, its adjusted earnings before interest, taxes depreciation and amortization (EBTIDA) was around five times higher than its net debt. Together, these metrics show that Vertiv’s balance sheet is in an extremely strong position.

Competition From Customers? Hyperscaler Risks and Rewards

While Vertiv has proven to be a leader in data center power and cooling, risks for this company come from an unexpected force: its own customers. Notably, in mid-2025, Amazon.com (NASDAQ: AMZN) announced that it had built custom liquid cooling systems. The firm designed its “In Row Heat Exchanger" (IRHX) specifically to cool NVIDIA’s (NASDAQ: NVDA) Blackwell racks. This announcement sent Vertiv shares down around 6% in one day. Overall, customer competition is a risk investors should not ignore.

Bloomberg Intelligence analyst Mustafa Okur notes, “Amazon Web Services rolling out its own server liquid-cooling system could weigh on Vertiv’s future growth prospects." Okur estimates that around 10% of Vertiv’s overall sales come from liquid cooling and that Amazon may be one of Vertiv’s largest customers.

When it comes to companies supporting the AI buildout, the fact that massive companies like Amazon are the end customers is both a gift and a curse. On the positive side, becoming a hyperscaler supplier can translate into massive demand, with these companies each spending $100 billion to $200 billion annually on capital expenditures.

On the opposite end, these well-capitalized firms have resources that almost no other companies can match. Thus, they can invest in developing certain technologies internally. After using a product for a while, they may decide they have the capabilities to build it themselves. This can make significant sources of demand go away quickly.

With Amazon having taken the step to develop its own cooling systems, it's fair to question whether other hyperscalers could do the same. Still, as Okur notes, liquid cooling only makes up an estimated 10% of the company’s sales. Nonetheless, Amazon’s development illustrates a broad risk to be aware of.

Robust AI Buildout Supports Vertiv’s Outlook

Trading at a forward price-to-earnings ratio near 50X, Vertiv is by no means a “cheap” stock. The company’s valuation bakes in very significant, but not unachievable, long-term growth. Vertiv’s ability to continue appreciating rests greatly on the AI buildout staying strong for several more years and staving off competition.

Earnings of companies like GE Vernova (NYSE: GEV) suggest the buildout is far from over. GE Vernova, which supplies power and electrification equipment to support data centers, has just 10 gigawatts of capacity left in 2029 and 2030 combined. Last quarter alone, the firm booked 21 gigawatts. The firm expects to start taking orders into 2031 and beyond.

Vertiv’s gross margin increased by 400 basis points in its latest quarter, signaling pricing power. This indicates that the firm is in a strong competitive position, as new competition tends to push margins down.

Several analysts significantly upgraded Vertiv stock after the company’s earnings report. Updated targets average approximately $339. While this figure implies only a slight upside in shares, it flips the script versus the MarketBeat consensus price target. Near $272, the consensus target implies more than 10% downside.

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