Vertiv Surges 8% After Barclays Upgrade, $200 Target
Barclays upgrades Vertiv to Buy, sees substantial earnings upside as data center demand accelerates and liquid cooling market doubles.
The AI trade has a new picks-and-shovels favorite.
Vertiv Holdings jumped 8.4% on Friday after Barclays upgraded the stock to Overweight from Equal Weight and raised its price target to $200 from $181. Analyst Julian Mitchell called the recent pullback an "attractive entry point" and predicted the company would continue its pattern of beating expectations.
Data center infrastructure isn't as sexy as GPU design, but someone has to cool all those Nvidia chips. Vertiv is that someone.
What Barclays Sees
Mitchell's upgrade rests on a simple thesis: the street is underestimating Vertiv's earnings power.
Barclays projects adjusted EPS of $5.68 for 2026, compared to Bloomberg consensus of $5.24. For 2027, the bank's estimate sits 12% above consensus. That gap represents upside that isn't priced in.
The analyst pointed to Vertiv's history of conservative guidance. Management tends to set targets they know they can beat, then "beat and raise" each quarter. It's a pattern that works until it doesn't—but so far, it hasn't stopped working.
Data centers now account for roughly 80% of Vertiv's revenue. That concentration, once a risk factor, has become an advantage as AI buildout accelerates beyond what anyone projected two years ago.
The Liquid Cooling Angle
Here's where it gets interesting.
Dell'Oro Group data shows the liquid cooling market grew more than 110% year-over-year on a trailing 12-month basis through Q3 2025. That's not a typo. The segment is more than doubling annually.
Vertiv makes liquid cooling systems. As AI chips get more powerful, they generate more heat. Air cooling isn't sufficient for the latest GPU clusters. Hyperscalers and enterprise data centers are retrofitting facilities with liquid solutions, and Vertiv is one of a handful of vendors capable of delivering at scale.
The company's Q3 results reflected this demand. Revenue rose 19% year-over-year, adjusted EBITDA climbed 30%, and backlog hit $9.5 billion—a record. Management raised full-year guidance, citing continued momentum from AI infrastructure customers.
That backlog number matters. It provides visibility into 2026 revenue that most industrial companies don't have.
Relative Performance
Barclays framed part of the upgrade as a catch-up trade.
Vertiv has lagged other AI-adjacent industrial names like GE Vernova and nVent Electric over the past year. Mitchell argues that gap should close as investors recognize the company's exposure to the same demand drivers.
The stock fell roughly 20% from its October highs before Friday's rally. That correction looked overdone relative to fundamentals—earnings estimates continued rising even as the share price fell. Barclays is betting on mean reversion.
It's worth noting: the analyst isn't predicting a new paradigm. He's predicting that Vertiv will do what it's been doing, and that the market will eventually pay a fuller price for it.
Data Center Capex Context
The timing aligns with broader spending trends.
Microsoft, Google, Amazon, and Meta are all increasing data center capital expenditure for 2026. The hyperscalers are in an arms race, each trying to build enough compute capacity to train and deploy the largest models. That spend flows directly to infrastructure providers like Vertiv.
Recent coverage of the semiconductor rally has focused on chipmakers, but the enabling infrastructure layer captures significant value too. Power management, cooling, and facility design are bottlenecks that limit how quickly capacity can come online.
Vertiv sits at that bottleneck. When Microsoft announces a $50 billion data center buildout, a meaningful portion flows to companies like Vertiv before any revenue-generating workload runs.
What Could Go Wrong
Nothing is riskless, as Barclays acknowledges.
The company depends on continued capex growth from a concentrated customer base. If hyperscalers slow spending—due to AI demand disappointing, recession, or regulatory pressure—Vertiv's revenue would feel it immediately.
There's also competitive risk. Schneider Electric, Eaton, and other industrial conglomerates are pushing into data center infrastructure. Vertiv's market share isn't guaranteed.
And valuation isn't cheap. Even after the pullback, the stock trades at roughly 25x next year's earnings. That's a premium that requires continued execution.
But for investors looking for AI exposure beyond the semiconductor giants, Vertiv offers something different: real infrastructure, real revenue, and a backlog that provides unusual visibility. The market's 2026 opening session showed tech remains the leadership theme. Vertiv is riding that wave.