Melius upgrades Vertiv stock to Buy on AI spending acceleration

Investing.com - Melius Research upgraded Vertiv Holdings Co (NYSE:VRT) from Hold to Buy on Tuesday, raising its price target to $165. The company, currently valued at $48.12 billion, has delivered an impressive 11.22% return year-to-date, according to InvestingPro data.

The upgrade comes despite Vertiv’s recent stock price appreciation, with Melius citing diminished capital expenditure risks and accelerating artificial intelligence spending as key factors behind the decision.

Melius highlighted Vertiv’s position as a "critical picks/shovels supplier" in the AI ecosystem, noting the industry will likely face supply constraints for an extended period.

The research firm expressed confidence that Vertiv will develop a larger than expected aftermarket presence as its installed base grows, experiences high utilization rates, and sees higher replacement cycles.

Melius suggested Vertiv could transition "from a capex story to a capex + annuitized aftermarket story within just 2-3 years," while comparing its valuation context to Nvidia (NASDAQ:NVDA) approaching a $4 trillion market cap and GE Vernova’s recent performance.

In other recent news, Vertiv Holdings Co. reported several significant developments. Citi raised its price target for Vertiv to $130, maintaining a Buy rating due to the company’s strategic position in the expanding data center market, particularly driven by AI growth. The firm anticipates Vertiv to achieve tariff neutrality by the end of 2025, potentially reducing expected financial headwinds. Additionally, Evercore ISI increased its price target for Vertiv to $150, keeping an Outperform rating, citing the company’s potential for high revenue growth and margin expansion in the AI data center sector. Vertiv also introduced a new cooling and power design for NVIDIA’s AI platform, promising improved energy efficiency and faster deployment times. The company announced the appointment of Mike Giresi as the new global CIO, who will lead Vertiv’s digital strategy initiatives. Furthermore, Vertiv’s CFO, David Fallon, plans to retire, with the company actively searching for his successor while maintaining its financial outlook for 2025. These developments underscore Vertiv’s ongoing focus on innovation and strategic growth in the AI and data center markets.

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