Vertiv Holdings Co (VRT) | The Buildout — AI Infrastructure
The Verdict
Vertiv designs, manufactures, sells, installs, maintains, and services critical digital infrastructure for data centers, communication networks, and commercial and industrial environments. In the AI buildout, it supplies the physical layer that AI data centers require: power delivery, power quality, liquid cooling, integrated modular infrastructure, and services.
| Market Cap | — |
| Revenue (TTM) | $11.5B |
| Revenue Growth | +26.2% |
| EBITDA Margin (TTM) | 22.1% |
| Net Debt | $146M |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Management says global pipeline is accelerating and expects another year of robust orders growth; demand is described as broad across hyperscaler, enterprise, colocation, and neocloud customers.
- Full-year 2026 guidance was raised twice since the year began, lifting the net sales midpoint, adjusted operating margin to 23.8%, and adjusted FCF to $2.5B.
- Q2 ended in a net cash position with net leverage negative 0.1x and adjusted free cash flow of $925M, up 234% year over year.
- Named first-of-kind 800V DC AI data center award with NVIDIA and VisionBay AI—customer validation in 2026 and deployment planned for 2027.
- Thermal M&A rounds out the full spectrum: ThermoKey closed June 12, 2026, and Strategic Thermal Labs closed April 2026.
What We’re Watching
- Large-project execution: Q2 revenue missed guidance on Smartron/OneCore timing, and H2 guidance assumes the deferral converts.
- No quantitative orders or backlog disclosure means pipeline acceleration cannot be externally verified from filings.
- Post-Q2 legal investigation announcements from SBS Law and Pomerantz have no specific claims or evidence yet.
- EMEA organic growth was still negative in Q2 at -2%; Q3 guide implies mid-to-high teens but the inflection is not yet proven.
The thesis is intact but now pivots on execution. Customer neighbor order books remain capacity-constrained and capex-heavy, management raised full-year guidance across all key metrics after Q2, and the company ended the quarter net cash. The open question is whether the guided H2 step-up—Q3 organic growth around 35% versus Q2's 18%—can convert large-project backlog without a second revenue-timing miss.
Earnings Beat
Q2 2026 net sales were $3.274 billion, up 24% reported and 18% organic, but below the guidance midpoint by about $76 million. Adjusted operating margin was 22.6%, up 410 basis points year over year, and adjusted diluted EPS was $1.52, up 60%. Adjusted free cash flow was $925 million, up 234%.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $3.3B | $2.6B | $2.6B | +24.1% |
| Gross margin | 37.7% | 37.7% | 32.2% | +550bps |
| EBITDA | $712M | $548M | $526M | +35.2% |
| EPS | $1.27 | $0.99 | $0.83 | +52.4% |
| Adjusted free cash flow | $925M | $652.8M | n/a | +234% y/y |
Pipeline is actually accelerating.— Giordano Albertazzi, CEO and President, 2026-07-29
Management tone: Management's tone shifted from Q1's 'pipeline momentum continues to be strong' to Q2's 'pipeline is actually accelerating,' and CEO Albertazzi said he is more confident in the trajectory than ever. Management also acknowledged the Q2 revenue timing shift from large-project execution and supply-chain congestion, while declining to quantify the dollar impact.
Management Guidance
Management raised full-year 2026 guidance across all key metrics: net sales to $14.0B midpoint, up 37% year over year; adjusted diluted EPS to $6.70, up 60%; adjusted operating profit to $3.325B; adjusted operating margin to 23.8%; and adjusted free cash flow to $2.5B. Q3 guidance midpoint is $3.75B net sales, about 35% organic growth, and adjusted operating margin of 24.5%. The CFO said H2 guidance is not all-stars-aligned and assumes some supply-chain congestion continues.
Trajectory
Revenue stepped down seasonally in Q1 FY2026 to $2,649.5M (-8.0% QoQ) then rebounded in Q2 to $3,274.3M (+23.6% QoQ). Gross margin was 37.7% in both FY2026 quarters, while EBITDA margin moved from 20.7% to 21.7%. Management attributes Q2's revenue shortfall to large-project timing and supply-chain congestion, and Q3 guidance implies roughly 35% organic growth.
The Model
The model projects FY+1 revenue of $14,000M and EBITDA of $3,416M at a 24.4% margin, and FY+2 revenue of $17,500M and EBITDA of $4,550M at a 26.0% margin. The FY+1 revenue projection matches management's full-year 2026 revenue guide midpoint; FY+2 reflects continued capacity expansion, thermal M&A integration, and the 800V DC roadmap.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $10.2B | $14.1B | $17.5B |
| YoY Growth | — | +37.8% | +24.1% |
| EBITDA | $2.2B | $3.3B | $4.4B |
| EBITDA Margin | 21.2% | 23.4% | 25.3% |
Projections are the median of 5 independent model runs. The model’s revenue sits 1.6% below analyst consensus.
Management raised full-year 2026 guidance across all key metrics: net sales to $14.0B midpoint, up 37% year over year; adjusted diluted EPS to $6.70, up 60%; adjusted operating profit to $3.325B; adjusted operating margin to 23.8%; and adjusted free cash flow to $2.5B. Q3 guidance midpoint is $3.75B net sales, about 35% organic growth, and adjusted operating margin of 24.5%. The CFO said H2 guidance is not all-stars-aligned and assumes some supply-chain congestion continues.
What Could Go Right — and Wrong
- H2 2026 conversion delivers: Q3 organic growth roughly 35% and full-year organic growth 31% are met or exceeded as deferred Q2 revenue converts.
- Quantitative orders and backlog disclosure returns, converting qualitative pipeline claims into verifiable fact.
- The 800V DC roadmap converts on schedule—customer validation in 2026 and rack/pod deployment in 2027—with a successful Vera Rubin deployment.
- EMEA Q3 organic growth confirms mid-to-high teens, turning the region from organic-negative to a contributor.
- Thermal M&A integrates across the full thermal spectrum and expands direct-to-chip liquid cooling and heat-rejection revenue.
- A second consecutive quarter of large-project revenue timing slippage makes execution look structural rather than a one-quarter learning curve.
- The H2 $14.0B full-year guide proves too steep if capacity release, supply chain, and milestone timing do not align; H2 implied sales growth is near 45%.
- Tariff and price/cost dynamics reverse, pressuring the 23.8% FY adjusted operating margin guide.
- The 800V adoption timeline slips—management declined to comment on a rumor of a push to 2029—delaying content-per-megawatt expansion.
- Post-Q2 legal investigation announcements convert into specific allegations, pressuring the disclosure and governance record.
Looking Ahead
The next 12 months turn on the H2 2026 conversion and technology milestones. Management has guided Q3 organic growth of roughly 35% and full-year organic growth of 31%, backed by capacity additions in Johor, the Americas, and EMEA. The 800V DC roadmap moves from 2026 customer validation to deployment planned in 2027, while the B Market Structures acquisition and PurgeRite NearZero scaling continue.
- Q3 2026Q3 earnings release — Tests roughly 35% organic growth guide and conversion of Q2 revenue timing shifts.
- H2 2026800V DC rack/pod portfolio launch — Portfolio launches in H2 2026; customer validation continues during 2026.
- H2 2026EMEA return to organic growth — Q3 guide implies mid-to-high teens organic after Q2's -2% organic.
- 2027800V DC rack/pod deployment — Named NVIDIA/VisionBay AI deployment planned for 2027.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $8.0B | $10.2B | $11.5B | +27.7% |
| Gross Margin | 34.2% | 34.5% | 37.5% | +35bps |
| EBITDA | $1.7B | $2.2B | $8.2B | +31.2% |
| EBITDA Margin | 20.6% | 21.2% | 22.1% | +57bps |
| Net Income | $496M | $1.3B | $1.7B | +168.8% |
| Free Cash Flow | $1.1B | $1.9B | $5.4B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)37.5%
- EBITDA Margin (TTM)22.1%
- Net Margin (TTM)15.1%
- ROIC35.4%
- FCF Conversion115.1%
- SBC / Revenue0.5%
The Company
Vertiv designs, manufactures, sells, installs, maintains, and services critical digital infrastructure technologies for data centers, communication networks, and commercial and industrial environments. Its portfolio spans AC and DC power management, thermal management, switchgear, busbar, integrated modular solutions, racks, UPS, energy storage, monitoring and management software, and services. In the AI buildout, power density and thermal load rise; Vertiv supplies the powertrain, liquid cooling, and pre-integrated infrastructure that AI data centers require.
Vertiv manages the business through three geographic reportable segments—Americas, APAC, and EMEA—with engineering, manufacturing, operations, sales, and service locations in more than 40 countries and approximately 300 locations. The announced B Market Structures acquisition is referenced as vertical integration for infrastructure frame construction. Capacity is expanding in Johor, Malaysia, five Americas plant expansions, and EMEA chiller capacity.
Business Segments
Competitive Landscape
Vertiv competes against large global electrification and thermal competitors—Schneider Electric, Eaton, Legrand, and Huawei—and niche players—Delta Electronics, Stulz, Johnson Controls, and Socomec—named in the 10-K. The competitive position is not sole-source; management differentiates on a full-spectrum power and thermal portfolio, integrated solutions, services scale, and an architecture-agnostic roadmap.
- Schneider Electric S.E.Named in 10-K as a large-scale global competitor; not discussed in calls.
- Named as large-scale global competitor; not discussed.
- Legrand SANamed in 10-K as large-scale global competitor; not discussed.
- Huawei Investment & Holding Co., Ltd.Named in 10-K as large-scale global competitor; not discussed.
- Delta Electronics, Inc.Named in 10-K as niche player; not discussed.
Supply Chain
Vertiv sits downstream of component suppliers and upstream of data-center owners and operators, assembling power and thermal systems into point products and integrated solutions.
More on VRT: Earnings recap