This AI Stock Has an $15 Billion Revenue Backlog That Could Fuel a Breakout in 2026

Artificial intelligence (AI) investing has largely focused on GPU players, AI model builders, and AI software companies. However, data centers also require highly specialized power management and thermal management systems, along with lifecycle services, to support AI infrastructure at scale.

Vertiv Holdings (NYSE: VRT) stands to benefit from this opportunity. The company sells end-to-end power and thermal management systems, including liquid-cooling solutions for high-performance data centers, communication networks, and commercial and industrial environments.

In the company's fourth quarter fiscal 2025 earnings (ending Dec. 31, 2025) call, management gave investors one of the clearest signs that demand remains exceptionally strong. That number was the backlog.

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The $15 billion backlog

Vertiv exited fiscal 2025 with a $15 billion backlog, more than double year over year. In the fourth quarter, the company's organic orders were up 252% year over year and 117% sequentially. The company's trailing 12-month organic orders were also up 81% year over year at the end of fiscal 2025. Vertiv reported a book-to-bill ratio of 2.9 times, implying that the company received nearly three dollars of new orders for every dollar of revenue recognized in the fourth quarter.

Vertiv's backlog reflects legally binding purchase orders and not just customer interest or early stage commitments. The backlog also extends into a 12- to 18-month delivery window, reflecting the large size and complexity of AI infrastructure deployments. Hence, beyond near-term revenue visibility, the backlog is also supporting growth past 2026.

The quality of this backlog is also improving. At its February Citi conference, management noted that Vertiv is increasingly winning system-level orders, which are integrated solutions covering multiple power and cooling components to support entire data center setups. These projects typically carry higher margins than point-product sales, where the company sells individual pieces of equipment.

Vertiv's solutions, such as SmartRun and OneCore, are helping the company capture a larger share of spending within each data center project. SmartRun is a prefabricated system that helps data centers install power and cooling infrastructure faster. OneCore is the company's end-to-end data center infrastructure solution. These systems support the broader digital infrastructure that powers cloud computing, Internet of Things, and AI-driven applications.

A large backlog could translate to a strong 2026

A large backlog is important, but only if the company can convert it into robust revenue and earnings. This requires effective execution capabilities and Vertiv has already demonstrated them in its recent quarter.

In the fourth quarter, Vertiv's revenue rose 22.7% year over year to $2.88 billion, while adjusted diluted earnings per share (EPS) grew 37% year over year to $1.36.

Management is guiding fiscal 2026 revenue of $13.5 billion at the midpoint, implying 28% year-over-year organic growth. The company also expects fiscal 2026 adjusted diluted EPS of $6.02 at midpoint, implying 43% year-over-year growth.

Vertiv is focusing on expanding its production capacity and advancing its technology to convert backlog into revenue. The company is expanding factories and bringing new locations online, while also scaling its supplier network. Vertiv expects to invest 3% to 4% of its sales as capex in fiscal 2026 to support its growth plans.

Management has cautioned that quarterly orders can be lumpy. While the company secured around $8 billion of orders in the fourth quarter, this should not be treated as the normal run rate or the level of orders the company expects to receive every quarter. However, the company has been seeing customer interest despite impressive fourth-quarter order intake. This suggests that the backlog is not simply made up of demand pulled forward from future periods.

Complexity favors Vertiv

With AI data centers becoming increasingly complex and power-intensive, demand for tightly integrated electrical, cooling, and information technology infrastructure is also rising. Liquid cooling solutions are now a part of most AI-related customer engagements. Vertiv can also help customers address challenges such as power grid constraints, securing regulatory approvals before building new data centers, and power availability issues through its system-level infrastructure approach.

Vertiv's service business is also gaining traction. Lifecycle services orders, which include installation, maintenance, and operational support for data centers over their operating life, grew more than 25% year over year in the fourth quarter. The company currently has around 5,000 field people supporting these services. The services business is a critical competitive advantage and a growing source of recurring revenue.

Valuation

Vertiv is trading at over 31 times forward earnings, which is relatively high compared to the S&P 500 index's forward price-to-earnings ratio of 22 times.

However, analysts still expect strong growth for Vertiv in fiscal 2026. Consensus average revenue estimate for fiscal 2026 is $13.68 billion, implying a year-over-year growth of 33.7%, while consensus average GAAP earnings per share (EPS) is estimated to be $6.13, up 46% year over year.

Considering the company's impressive backlog, robust financial momentum, and rapidly expanding AI data center infrastructure market, Vertiv may even surpass these consensus expectations in fiscal 2026. As a result, the stock could still prove to be a smart pick even at the current elevated valuation levels.

Manali Pradhan, CFA 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.