BMO Initiates Vertiv Coverage with Outperform Rating, Cites 30% Upside on AI Data Center Demand

BMO Capital Markets launched coverage of Vertiv Holdings (VRT) with an Outperform rating and a $329 price target, implying approximately 30% upside from Friday’s closing price. Analyst Daniel DiCicco labeled the company a “premier data center play” positioned to benefit from sustained artificial intelligence infrastructure spending.

Vertiv supplies digital infrastructure and thermal management hardware for data centers, a segment accounting for roughly 85% of its revenue. Shares have surged more than 900% over the past five years but have retreated from their May highs, creating what DiCicco views as an attractive entry point.

“Vertiv is well positioned as data centers are increasing in scale and intensity — more power to the rack — and demand for resilience and speed to deployment continues to increase,” DiCicco wrote in a note to clients Sunday.

The backdrop supports the thesis. The United States hosts more than 4,700 data centers, a figure that continues to climb. According to commercial real estate firm Avison Young, land purchases for future data center development reached $6 billion in the first half of 2024, a 79% increase from the prior year.

Vertiv management estimates its total addressable market at $75 billion, expanding 16% to 18% annually, with the data center segment growing 18% to 20%. DiCicco suggested those long-term forecasts may prove conservative. The company’s full-suite offering — spanning power, thermal, and integrated systems — allows it to capture more value per megawatt, currently estimated at $3.25 to $3.75, with upside from standardization, service growth, and integrated solutions.

“VRT has positioned itself as one of the few providers capable of delivering a fully integrated power and thermal management solution across the entire data center,” DiCicco noted.

Shares of Vertiv have advanced nearly 56% year to date.

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