I Love Vertiv for 1 Reason, and It's Not the Backlog
Key Points
Vertiv's services and spares segment grew 62% in the third quarter of 2026.
The stock is up nearly 50% year to date, but well off the 52-week high of $379.
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Vertiv (NYSE: VRT) decided at the end of last year to stop reporting quarterly backlog numbers, so Wall Street would focus more on the company's revenue and reduce what management deemed excessive volatility from intermittent large orders. There's a better reason than the backlog to love Vertiv, anyhow, and that's services and spares.
Vertiv creates digital infrastructure for data centers, communication networks, and industrial facilities. While every power and cooling system sold is a win, each requires maintenance and parts over the years to come. In liquid cooling, the quality of the fluid is critical to the system's life and performance.
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Vertiv recognizes this and just recently completed the acquisition of the European company King Environmental Services. This comes after the 2025 acquisition of PurgeRite in North America. Even if AI construction slows, the services revenue should keep cash flowing in.
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In the third quarter of 2026, Vertiv's net sales grew 61% year over year to over $4.3 billion. Adjusted earnings per share rose 78%, and adjusted free cash flow grew to $652 million, a 50% increase from the previous year. Services and spares, in particular, grew by 62% this quarter compared to 2025.
The stock jumped on the Q3 release, but shares are still well off their 52-week high of $379. The main risk remains tied to hyperscaler spending, but Vertiv's strong services segment and excellent Q3 earnings are giving investors plenty of reasons to buy the stock. Of course, the $15 billion backlog doesn't hurt either.
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vertiv. The Motley Fool has a disclosure policy.
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