Could Vertiv Become the Next Essential AI Infrastructure Stock?

To date, Nvidia has been the centerpiece stock of the artificial intelligence (AI) revolution. And rightfully so. The world's been waiting on computer processors powerful enough to turn lofty AI ambitions into reality. Nvidia delivered, with its silicon now serving as the heart and soul of most artificial intelligence platforms.

As the AI movement evolves though, unexpected challenges are coming to light. For instance, the planet's power infrastructure isn't quite as ready as hoped to supply data centers with all the electricity they need. These challenges are, of course, presenting new growth opportunities for investors -- opportunities better than Nvidia is at this time.

And one name in particular is rising to the surface as one of the next great stock picks of the artificial intelligence revolution. That's AI infrastructure specialist Vertiv (NYSE: VRT). Although it's never going to be as big as Nvidia nor likely to dish out the sort of sustained gains that Nvidia did, from here, it does offer tremendous long-term promise.

Built for the growth opportunity at-hand

It's not the only outfit offering solutions that meet artificial intelligence data centers' complicated needs. Newcomers like Nebius, Applied Digital, and Iren (and others) are in this business as well, each with their own unique offering. Vertiv brings something very special to the table though. That's cost-effective flexible power and cost-efficient cooling solutions.

One of these cooling solutions is chilled water systems. While not unheard of, it's still relatively rare within the world of data centers. But it shouldn't be. While they can be complicated and somewhat expensive to set up, McKinsey reports that water-cooled platforms ultimately consume about 30% less power than more conventional alternatives.

Image source: Getty Images.

It's not just chilled water cooling that Vertiv offers though, or for that matter, just cooling. Power generation and electricity management are also in its repertoire.

Battery-based energy storage and highly efficient power transfer switches are also on its menu, for example, with the company reporting that its PowerDirect 7100 Energy hybrid DC power systems are 98% energy-efficient. In an industry where operating costs are soaring because some of this equipment is on the order of 30% less efficient, that's a pretty big deal.

The opportunity at-hand isn't ho-hum either. S&P Global Market Intelligence predicts worldwide data center power consumption will nearly double between now and 2030, and still won't be done growing by then. Meanwhile, Precedence Research believes the global data center cooling market itself is set to grow at an average annualized pace of nearly 12% through 2035.

Vertiv is well-positioned to plug into both of these growth trends.

Keep your eyes on the long-term prize

These tailwinds don't necessarily mean Vertiv shares will be easy to own anytime soon. They likely won't be, in fact. Although the already-profitable company's top line is expected to grow another 20% in 2026 and pump up per-share profits at a similar rate, this ticker is understandably being lumped in with most other AI stocks, which some believe are in a bubble.

If that bubble pops, VRT will almost certainly tumble with those other names. In the meantime, it's just plain volatile, sliding from late-October's peak near $200 to this month's low near $150 back to where it was priced as of mid-October.

Just don't lose your long-term perspective. This stock is currently valued at just a little over 30 times the coming year's projected per-share profits of $5.28, which is cheap by most artificial intelligence stock standards.

And thanks to its recent AI-related volatility, the stock's also trading well below analysts' consensus price target of $200.62. Data center owners and operators desperately need the technology it offers, even if most investors don't see it yet. That's the crux of the opportunity here.

This might seal the deal, so to speak: Not only was Vertiv's third-quarter revenue of just under $2.7 billion up 29% year over year, the company's backlog of business grew from $8.5 billion as June to $9.5 billion now. The tailwinds blowing here are clearly picking up speed.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.