Vertiv Holdings Co (VRT): Strong Q2 Earnings Overshadowed by AI Spending Concerns, Barron’s Analyst Remains Optimistic

We recently compiled a list of the 30 AI News Investors Should Not Miss. In this article, we are going to take a look at where Vertiv Holdings Co (NYSE:VRT) stands against the other AI stocks.

Artificial intelligence (AI) data centers are one of the hottest topics on Wall Street as companies across the industrial spectrum compete in a race to deploy AI technologies in their operations. The latest update comes from data center company Equinix, which recently announced that it would be forming a joint venture with GIC, a Singapore-based sovereign wealth fund, and Canada Pension Plan Investment Board, to raise more than $15 billion in capital. Per the data center company, the capital would be used to expand the US footprint of hyperscale data centers. Hyperscale data centers are the largest in the industry, typically developed by technology giants based in the US, and offer massive networking capacity and often consume as much power as a big city or even a small country.

Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.

As technology stocks stage a comeback on the back of Fed rate cuts and AI optimism, the news coming from the commerce department in the US has buoyed investors further. The US government said earlier this week that it plans to award nearly $100 million to boost the use of artificial intelligence in developing new sustainable semiconductor materials. The funding is part of the more than $52 billion in US chip manufacturing and research grants promised by US President Joe Biden. The latest funding would go towards helping universities, national laboratories, and the private sector develop AI-powered autonomous experimentation for sustainable semiconductor manufacturing. The goal is to reduce time needed to develop new semiconductor materials that are less resource-intensive.

Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.

Story continues

Our Methodology

For this article, we selected AI stocks by combing through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A close-up of a group of technicians working on complex data center systems.

Vertiv Holdings Co (NYSE:VRT)

Number of Hedge Fund Holders: 92 

Vertiv Holdings Co (NYSE:VRT) designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments. The stock has gained attention among Wall Street analysts since the firm posted second quarter earnings in which it reported 13% growth in sales and a 50% jump in earnings. However, the stock still dropped over 10% in value following the report amid broader concerns around overspending in the AI sector. Barron’s analyst Jacob Sonenshine wrote in an investor note on the firm that the infrastructure and cooling systems needed for data centers were the bread and butter for Vertiv Holdings Co (NYSE:VRT), whose business was too strong to get undermined by what looked to be a short-term concern.

Overall VRT ranks 13th on our list of the AI stocks investors should not miss. While we acknowledge the potential of VRT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VRT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

Disclosure: None. This article is originally published at Insider Monkey.