Vertiv: The Hyperscaler Spending Trade

Deep Value Investing12.07K FollowersFollow5ShareSavePlay(10min)Comment(1)SummaryI believe Vertiv may be one of the best players in the industrial sector to benefit from the hyperscaler CapEx supercycle.The demand backdrop remains strong, with Microsoft, Amazon, Alphabet, and Meta planning about $635 billion of 2026 AI infrastructure spending, up 66% yoy.The inflection point happened earlier this year. Organic orders jumped about 252%, backlog reached $15 billion, up 109%, and book-to-bill was roughly 2.9x.Even at 47x forward earnings, I see room for further multiple expansion because visibility appears to be extending into late 2026 and 2027, not just the next few quarters.The main risk has little to do with peak hyperscaler spending. I am more concerned with power bottlenecks delaying hyperscaler buildouts this year. Erik Isakson/DigitalVision via Getty Images With the market back in risk-on mode, I am initiating coverage on Vertiv Holdings Co (VRT), a prime picks and shovels play on the AI data center buildout. Despite the 25% jump in oneThis article was written byDeep Value Investing12.07K FollowersFollowSmall deep value individual investor, with a modest private investment portfolio, split approx. 50%-50% between shares and call options. I have a B.Sc. in aeronautical engineering and over 6 years of experience as an engineering consultant in the aerospace sector. The latter statement is not relevant in any way whatsoever to my investment style, but I thought to add it for self-indulgent purposes. I have a contrarian investment style, highly risky, and often dealing with illiquid options. How illiquid? Well, you can land a Jumbo on the spread and still have clearance for take-off. From time to time, I buy shares, mostly to not be categorized as a degen by my fellow investor friends, therefore the 50%-50% allocation. My timeframe tends to be between 3-24 months.I like stocks that have experienced a recent sell-off due to non-recurrent events, particularly when insiders are buying shares at the new lower price. This is how I often screen through thousands of stocks, mainly in the US, although I may own shares in banana republics. I use fundamental analysis to check the health of companies that pass through my screening process, their leverage, and then compare their financial ratios with the sector, and industry median and average. I also do professional background checks of each insider who purchased shares after the recent sell-off. I use technical analysis to optimize the entry and exit points of my positions. I mainly use multicolor lines for support and resistance levels on weekly charts. From time to time I draw trend lines, taken for granted, in multicolor patterns. Note: I tried to keep my introduction as real, and authentic as possible. I dislike empty suits, high-level BS, deep-level BS, unnecessary jargon, and self-indulgent, third-person written introductions with an air of superiority.Thanks for reading my introduction!Analyst’s Disclosure: I/we have a beneficial long position in the shares of VRT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.