Artificial intelligence (AI) investments are mainly concentrated in GPU manufacturers, AI model builders and AI software companies. However, data centers also require highly specialized power and thermal management systems and lifecycle services to support AI infrastructure at scale.
Vertiv Technology Holdings Inc.(NYSE: VRT) will benefit from this opportunity. The company sells end-to-end power and thermal management systems, including liquid cooling solutions for high-performance data centers, communications networks, and commercial and industrial environments.
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During the company’s fiscal 2025 fourth-quarter earnings call (ending December 31, 2025), management gave investors one of the clearest signs that demand remains exceptionally strong. This number is the backlog of orders.
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Vertiv ended fiscal 2025 with $15 billion in backlog, more than double year-over-year. In the fourth quarter, the company’s organic orders grew 252% year-over-year and 117% quarter-on-quarter. The company’s trailing 12-month organic orders also grew 81% year over year through the end of fiscal 2025. Vertiv’s book-to-bill ratio was 2.9x, meaning the company received nearly $3 in new orders for every $1 of revenue recognized in the fourth quarter.
Vertiv’s backlog reflects legally binding purchase orders, not just customer benefits or early commitments. The backlog also stretches to a 12- to 18-month delivery window, reflecting the scale and complexity of AI infrastructure deployments. Therefore, in addition to near-term revenue visibility, the backlog supports growth beyond 2026.
The quality of that backlog is also improving. At the Citi conference in February, management noted that Vertiv is increasingly winning system-level orders, which are integrated solutions covering multiple power and cooling components to support entire data center setups. These projects are typically more profitable than point product sales (where a company sells a single piece of equipment).
Vertiv’s solutions, such as SmartRun and OneCore, are helping the company capture a greater share of spend on each data center project. SmartRun is a prefabricated system that helps data centers install power and cooling infrastructure faster. OneCore is the company’s end-to-end data center infrastructure solution. These systems support the broader digital infrastructure that powers cloud computing, IoT and artificial intelligence-driven applications.
A large backlog is important, but only if the company can turn it into strong revenue and earnings. This requires effective execution, which Vertiv has demonstrated in its most recent quarter.
In the fourth quarter, Vertiv’s revenue increased 22.7% year-on-year to $2.88 billion, and adjusted diluted earnings per share (EPS) increased 37% year-on-year to $1.36.
Management expects fiscal 2026 revenue to be $13.5 billion at the midpoint, which would represent 28% year-over-year organic growth. The company also expects fiscal 2026 adjusted diluted earnings per share at the midpoint of $6.02, implying year-over-year growth of 43%.
Vertiv is focused on expanding production capacity and improving technology to convert backlog into revenue. The company is expanding its factories and opening new locations while expanding its supplier network. Vertiv expects to invest 3% to 4% of its sales as capital expenditures in fiscal 2026 to support its growth plans.
Management warned that quarterly orders could be volatile. Although the company secured approximately $8 billion in orders during the fourth quarter, this should not be considered a normal run rate or the level of orders the company expects to receive each quarter. However, despite its impressive fourth-quarter order volume, the company is still seeing customer interest. This suggests that the backlog is made up of more than just demand being pulled in future periods.
As AI data centers become more complex and power-hungry, the need for tightly integrated electrical, cooling and information technology infrastructure continues to grow. Liquid cooling solutions are now part of most AI-related customer activities. Vertiv also helps customers address challenges such as grid constraints, obtaining regulatory approvals before building new data centers and power availability issues through a system-level infrastructure approach.
Vertiv’s service business is also attracting increasing attention. Lifecycle service orders, which include installation, maintenance and operational support throughout the entire operating life of a data center, grew by more than 25% year-over-year in the fourth quarter. The company currently has approximately 5,000 field personnel supporting these services. The services business is an important competitive advantage and a growing source of recurring revenue.
Vertiv trades at over 31 times forward earnings, vs. S&P 500 Index The index trades at a forward price-to-earnings ratio of 22 times.
However, analysts still expect Vertiv to achieve strong growth in fiscal 2026. Consensus average revenue for fiscal 2026 is expected to be $13.68 billion, implying year-over-year growth of 33.7%, while GAAP average earnings per share (EPS) is expected to be $6.13, representing year-over-year growth of 46%.
Vertiv could even beat these consensus estimates in fiscal 2026, given the company’s impressive order backlog, strong financial momentum, and the rapidly expanding AI data center infrastructure market. Therefore, even at current valuation levels, the stock could still be a smart buy.
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Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has an position and recommends Vertiv. The Motley Fool has a disclosure policy.
This AI Stock Has $15 Billion in Backlog of Revenue and Could Breakout in 2026
