Why Vertiv and Eaton Are the Ultimate Infrastructure Plays for the AI Boom

While software providers and chipmakers grab the biggest headlines, the artificial intelligence (AI) revolution is fundamentally a hardware story. The massive computing clusters required for artificial intelligence cannot run without two critical elements: staggering amounts of electrical power and highly sophisticated cooling systems.

Industrial companies Vertiv (NYSE: VRT) and Eaton (NYSE: ETN) help provide the essential infrastructure that keeps these artificial intelligence-focused data centers running.

Image source: Getty Images.

Vertiv, based in Westerville, Ohio, produces power and thermal solutions for data centers, mainly direct-to-chip liquid cooling, and has recurring revenue from its global services network.

Eaton, based in Ireland, is a power management company that designs and manufactures heavy-duty electrical infrastructure, including transformers, switchgear, uninterruptible power supplies (UPS), and advanced liquid-cooling systems, essential for powering and protecting data centers, utility grids, and industrial facilities.

Here are three reasons why these two companies have compelling stocks to own right now:

1. Hyperscale backlogs are growing

The massive capital expenditures committed by big tech hyperscalers are showing no signs of slowing, translating directly into a massive multiyear visibility window for both companies.

Vertiv, at the end of 2025, said its project backlog had skyrocketed to more than $15 billion, driven by a massive surge in data center orders. In the first quarter, Vertiv reported revenue of $2.65 billion, up 30% year over year, and earnings per share (EPS) of $0.99, up 136% over the same quarter a year ago. The company said it expects full-year revenue of $13.5 billion to $14 billion, compared with $10.2 billion in 2025. It also gave yearly EPS guidance of $6.30 to $6.40, up 87.6% from the same period last year.

Eaton is seeing a parallel boom with a backlog of $14.5 billion through Q1. The backlog grew by 48% in its electrical segment and by 28% in its aerospace segment in Q1.

Eaton is also seeing double-digit revenue growth. It set a Q1 record with $7.5 billion in revenue, up 17% year over year, while adjusted EPS rose 3% over the same period last year to $2.81.

Because building a data center takes years, these backlogs guarantee a long, highly visible revenue runway that insulates both companies from short-term tech market volatility.

2. Vertiv dominates the liquid cooling market

Traditional data centers use air conditioning to stay cool. However, the next-generation chips powering AI generate intense heat densities that air alone cannot manage. The industry is rapidly pivoting to liquid cooling, and Vertiv is uniquely positioned to dominate this space.

Vertiv has rapidly expanded its footprint, including opening high-capacity facilities, such as its new Johor, Malaysia site, to manufacture specialized liquid-cooling equipment, including its CoolChip coolant distribution units.

Through strategic partnerships with chip design leaders and tactical acquisitions such as its purchase of Strategic Thermal Labs, Vertiv provides end-to-end solutions from chip-level cold plates to facility-scale heat rejection, making it the absolute go-to partner for high-density AI clusters.

3. Eaton rules the in-demand gray space power market

If Vertiv rules the thermal environment inside the server room (the white space), Eaton rules the massive electrical infrastructure that brings power from the utility grid into the building (the gray space). AI chips require immense amounts of power, and Eaton's technical moat is solving this bottleneck.

Eaton provides heavy-duty transformers, switchgear, and uninterruptible power supply (UPS) systems to handle megawatt-class server racks.

Its next-generation 800-volt DC power distribution architecture streamlines power delivery directly to the server, eliminating multiple conversion steps and significantly reducing energy loss. Eaton's $9.5 billion acquisition in March of Boyd Performance Materials significantly expands its own advanced thermal capabilities, making it a more complete infrastructure powerhouse. The move is expected to be accretive to Eaton's adjusted EPS within two years, it said.

The pick-and-shovel plays are the safest ones in AI

Chip architectures will evolve, and competing software models will come and go, but every single iteration of advanced AI will require massive power distribution and extreme heat management. Eaton and Vertiv effectively tax the entire ecosystem's growth, regardless of which tech giant wins the software race.

There are risks, however. Both stocks are now viewed as AI stocks, and with that come higher valuations and greater volatility.

Vertiv's shares have risen by more than 25% so far this year, and Eaton's are up an astronomically high 85%. With that, their price-to-earnings ratios (P/E) have climbed. Eaton trades at more than 38 times trailing earnings, while Vertiv trades at 75 times trailing earnings. That's a lot to live up to, and any type of AI slowdown could send either stock slumping.

Still, both companies are beneficiaries of rising AI spending, and that trend doesn't seem to be slowing down anytime soon.

James Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eaton Plc and Vertiv. The Motley Fool has a disclosure policy.