Research · Initiation · 6 October 2026
Vertiv NYSE: VRT
The market has sold Vertiv as a volume story. Its margin says each megawatt is worth more.
The call LONG
- Price at publication
- US$253.62close, 5 October 2026
- Target
- US$300.00+18.3% · 12 months, to October 2027
- Conviction
- Medium
What proves it wrongAdjusted operating margin falls year on year in any quarter to mid 2027 while sales are still growing, or full year 2026 adjusted earnings per share land below the US$6.65 bottom of Vertiv's own guide, or the 2026 annual report shows backlog below the US$15.0 billion of a year earlier.
Read the full notePDF, 5 pages: thesis, valuation, scenarios, risks and sources Open the modelExcel, live formulas: change an assumption and the target moves
The call in brief
- Vertiv makes the power and cooling equipment inside AI data centres, and each AI megawatt needs more of it, and more complex versions of it, than an ordinary one.
- The proof is margin, not volume: adjusted operating margin has beaten the same quarter a year earlier every quarter since Q3 2025, reaching 22.6 per cent in Q2 2026.
- The shares have fallen a third since May on a sales miss, supply congestion and a dropped backlog figure. I read congestion with a rising margin as too little capacity, not too little demand.
- At 37.9 times the 2026 guide the market prices Vertiv like a diversified industrial. Twenty-eight times my 2028 estimate of US$10.65 gives US$300.
- Where I was wrong: my September piece cited service outgrowing products. Organically it grew more slowly, so the call rests on margin alone.