The Artificial Intelligence (AI) Stock That Institutional Investors Are Quietly Loading Up on for 2026

One of the more overlooked infrastructure problems with data centers is cooling.

Running advanced artificial intelligence (AI) programs, even on bleeding-edge hardware with loads of computing horsepower, generates a lot of heat. The small fan that's in your laptop or desktop doesn't cut it at that level.

No, you need advanced cooling systems, beefy industrial air conditioners, and liquid cooling to run a modern data center. A data center is an incredibly expensive investment, and the last thing you want is all your top-notch chips cooking themselves with the heat they generate from running.

Most of the headlines you'll see about AI-related infrastructure shortages have to do with chip hardware, like the current memory shortage, or the gluttonous appetite data centers have for electricity.

Both of those are serious problems, but cooling, which is just as serious an infrastructure concern, doesn't get anywhere near as much attention. Well, not from the media at least. Wall Street is paying close attention, and institutional investors have been pouring money into Vertiv (NYSE: VRT) to profit from the cooling needs of the tech industry and the data centers it's building all over the place.

The surge of investment has seen Vertiv shoot up 199% in the past 12 months. And, based on the latest moves of some of the biggest institutional investors out there, Wall Street seems to think Vertiv's bull run is far from over.

After a look at the company's latest results, I'm inclined to agree with them.

Image source: Getty Images.

What's Fonzie like?

He's cool. And so is Vertiv. Or, rather, it helps data centers stay cool with an extensive catalog of air- and water-cooling systems for data centers. It also offers server racks, power management hardware, and monitoring systems for data center operation.

It's an end-to-end data center infrastructure company. But the big opportunity here is cooling, which Vertiv offers an extensive list of products to assist with, including in-rack cooling units, evaporative free cooling systems that offer higher power efficiency than conventional HVAC systems, and even custom cooling systems for individual customer needs.

So, who's been buying shares?

Since Sept. 30, 2025, 920 institutional investors have opened new or expanded existing positions in Vertiv.. The biggest names among those investors that have increased their positions are likely BlackRock and State Street, which both increased their positions in Vertiv by 2.38% and 2.29%, respectively, as of Sept. 30, 2025. BlackRock is now Vertiv's second-largest shareholder with 9.43% of all shares now under its control.

JPMorgan Chase had one of the largest purchases, expanding its position by 4.2 million shares of 101.68% as of Sept. 30, 2025.

Still, those are some major votes of confidence from some very serious players on Wall Street. What has them pouring money into Vertiv? Well, the company has been going absolutely ballistic in terms of its financial results.

Cool money

For the whole of 2025, Vertiv saw its net sales hit $10.23 billion, up 26% over 2024 and $30 million above its guidance levels. Its adjusted diluted earnings per share (EPS) saw even better growth, up 47% over 2024 and $0.10 over guidance.

Data source: Vertiv Q4 2025 results presentation

As you can see from the table, Q4's growth alone was impressive, and the company is only projecting its growth streak to continue over 2026. Net sales are expected to climb 28% this year and adjusted operating profits expected to grow 45%.

Vertiv runs a net profit margin of 13%, and it has a fairly healthy balance sheet with a debt-to-equity ratio of 0.82.

Now, Vertiv is trading at a fairly high price-to-earnings (P/E) ratio of 73.24 at present, but that's actually lower than where it was in 2024 at 75.74, even after the company's nearly 200% bull run over the same period.

And, when you factor in earnings growth expected in the future to get Vertiv's price-to-earnings-to-growth (PEG) ratio, it's 0.80, which is below 1, hinting the company is undervalued even at these prices.

The consensus EPS forecast for Vertiv by the end of 2026, per Nasdaq, is $6.15, which is expected to further increase to $8.10 by the end of 2027 and $9.38 by the end of 2028. That's a pretty impressive EPS growth rate of 48.9% for 2026 alone. Keep in mind, Vertiv has beaten annual EPS estimates every year since 2023, which is when much of the AI spending spree began.

In fact, between the end of 2022 (ChatGPT launched in November of that year) and the end of 2023, Vertiv saw its EPS jump 233.9% from $0.53 to $1.77.

And clearly, Wall Street seems to think there's a lot more money to be made by keeping cool. Give Vertiv a look if you want to be cool.

JPMorgan Chase is an advertising partner of Motley Fool Money. James Hires has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase, T. Rowe Price Group, and Vertiv. The Motley Fool recommends BlackRock. The Motley Fool has a disclosure policy.