Debate Intensifies Over Data Center Supply and Demand
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5 days ago
0mins
Source: Fool
- Market Supply Concerns: Analysts warn of a potential oversupply of data center power and cooling capacity in the second half of 2026 and into 2027, which has pressured the stock prices of related equipment companies, despite Vertiv's strong order backlog of approximately $15 billion.
- Slowing Capital Expenditure Growth: Capital expenditures from Alphabet, Amazon, Meta, and Microsoft are projected to exceed $700 billion in 2026, a significant increase from $410 billion last year, but analysts believe this growth is unsustainable, which could impact Vertiv's market performance.
- Rising Demand for Liquid Cooling: As AI cluster densities increase, liquid cooling has become the standard for new deployments in 2026 and 2027, positioning Vertiv as a leader in this shift, with strong customer relationships expected to yield sustained market share gains.
- Investment Opportunity Analysis: While market fears of peak demand may lead to short-term volatility, Vertiv's long-duration order book and leadership in AI infrastructure make it an attractive investment candidate, suitable for gradual accumulation.
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Analyst Views on VRT
Wall Street analysts forecast VRT stock price to fall
17 Analyst Rating
15 Buy
2 Hold
0 Sell
Strong Buy
Current: 319.780
Low
195.00
Averages
206.07
High
230.00
Current: 319.780
Low
195.00
Averages
206.07
High
230.00
About VRT
Vertiv Holdings Co. provides mission-critical digital infrastructure technologies and lifecycle services primarily for data centers, communication networks, and commercial and industrial environments. The Company operates in three business segments: the Americas; Asia Pacific, and Europe, Middle East & Africa. The Company's offerings include alternate current (AC) and direct current (DC) power management, thermal management, low/medium voltage switchgear, busbar, air cooled and liquid cooled thermal management products, integrated modular solutions, racks, single phase UPS, rack power distribution, rack thermal systems, configurable integrated solutions, energy storage solutions, hardware, software for managing IT equipment, management systems for monitoring and controlling digital infrastructure, and services. It also provides preventative maintenance, acceptance testing, engineering and consulting, remote monitoring, training, spare parts, specialized fluid management, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Capital Expenditure Growth: Expected capital expenditures from Alphabet, Amazon, Meta, and Microsoft are projected to exceed $700 billion in 2026, a significant increase from $410 billion last year, yet the sustainability of this growth is questioned, potentially impacting Vertiv's market performance.
- Demand for Liquid Cooling: With rising AI cluster densities, liquid cooling is becoming the standard for new deployments in 2026 and 2027, and Vertiv's leadership in this area allows it to maintain competitiveness across market cycles, despite facing supply chain constraints and tariff risks.
- Investment Timing: Although market concerns about demand may lead to short-term volatility, Vertiv's long-duration order book and leadership in AI infrastructure make it an ideal candidate for gradual accumulation, especially as its stock price has retreated from highs, prompting investors to approach with caution.
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- Snowflake Surge: Snowflake experienced a strong rebound in after-hours trading, with its stock price rising, reflecting market optimism regarding its financial performance and future outlook, potentially drawing more institutional investor attention.
- Overall Market Performance: Amid the drop in oil prices, major indexes have generally risen, indicating increased investor confidence in economic recovery, which may promote further capital inflows into the stock market.
See More
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- Momentum Investment Strategy: Following Richard Driehaus's 'buy high and sell higher' strategy, Micron, Murphy USA, and Vertiv are identified as strong momentum stocks, showcasing continued upside potential that attracts investors seeking exceptional returns.
- Earnings Surprise Performance: Micron boasts an average earnings surprise of 21.7% over the last four quarters, while Murphy USA and Vertiv report 16.6% and 14.7% respectively, indicating strong performance against market expectations and boosting investor confidence.
- Momentum Scores: All three companies have received a B momentum score, reflecting their strong price trends and aligning with investor preferences for high-growth stocks, which could lead to higher investment returns.
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- Surging Market Demand: The soaring demand for datacenters presents unprecedented growth opportunities for AI stocks, particularly as companies like Nvidia and Intel rely heavily on critical technologies, solidifying their market dominance.
- Unique Company Spotlight: A recent report highlights a little-known company dubbed an 'Indispensable Monopoly' that provides essential technology needed by Nvidia and Intel, potentially positioning it as a key player in future market competition.
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- Surging Demand: The soaring demand for datacenters is expected to drive up the prices of AI stocks, reflecting strong market confidence in AI technologies.
- Market Outlook: As businesses accelerate their digital transformation, the expansion of datacenters will directly boost revenue growth for AI-related companies, particularly in cloud computing and big data sectors.
- Investment Opportunities: Increased investor interest in AI stocks may lead to accelerated capital inflows, further elevating these companies' market valuations and creating a positive feedback loop.
- Industry Competition: The rise in datacenter demand will compel AI companies to increase R&D investments to maintain competitive advantages, driving technological innovation and market share growth.
See More
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See More
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- Market Supply Concerns: As AI systems grow more powerful, there are fears of oversupply in data center power and cooling capacity in the second half of 2026 and into 2027, which has pressured Vertiv's stock price despite a robust order backlog of approximately $15 billion.
- Capital Expenditure Growth: Expected capital expenditures from Alphabet, Amazon, Meta, and Microsoft are projected to exceed $700 billion in 2026, a significant increase from $410 billion last year, yet the sustainability of this growth is questioned, potentially impacting Vertiv's market performance.
- Demand for Liquid Cooling: With rising AI cluster densities, liquid cooling is becoming the standard for new deployments in 2026 and 2027, and Vertiv's leadership in this area allows it to maintain competitiveness across market cycles, despite facing supply chain constraints and tariff risks.
- Investment Timing: Although market concerns about demand may lead to short-term volatility, Vertiv's long-duration order book and leadership in AI infrastructure make it an ideal candidate for gradual accumulation, especially as its stock price has retreated from highs, prompting investors to approach with caution.
See More
