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Investing.com - Vertiv Corp (NYSE:VRTV) shares dropped as much as 14% on Thursday while the industrial sector index (XLI) closed up 0.5%, following reports that Amazon (NASDAQ:AMZN) had launched a cooling competitor for AI servers.
UBS reiterated its Buy rating and $135.00 price target on Vertiv despite the significant stock decline. The firm noted that while liquid cooling represents a relatively small portion of Vertiv’s current business, it constitutes a disproportionate share of the company’s growth prospects.
UBS analyst Amit Mehrotra stated that the market fears are "misguided" and compared the situation to two previous pullbacks over the past year when Vertiv shares dropped significantly before rebounding strongly.
Based on its industry checks, UBS does not believe Amazon is actually competing with Vertiv’s liquid cooling offering. The firm explained that such competition would require manufacturing numerous components including coolant distribution units, manifolds, pumps, radiators, heat exchangers, cooling fluid, fans, seals, bearing-less solutions, and motors.
The significant stock reaction reflects investor sensitivity to potential competitive threats in the data center cooling space, particularly as AI infrastructure buildout accelerates demand for advanced thermal management solutions.
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