If you’re considering putting a bit of money into stocks within a diversified portfolio and want to manage risk by exploring growth opportunities, then focusing on the AI and data center sector could be quite worthwhile. Vertiv (VRT) -1.61%)) and nvent (NVT) 1.28%)) might not be the first companies that spring to mind when you think about leveraging the booming demand for data centers, but they actually present some interesting investment opportunities. Each plays a key role in delivering essential services and solutions in this space.
Vertiv, an Underrated Data Center Stock
Vertiv specializes in providing digital infrastructure for data centers and communications networks, encompassing areas like power management, switchgear, thermal management, and monitoring systems. Initially sold by Emerson to Platinum Equity in 2016, the company went public in 2020 under the leadership of Honeywell and David Court.
The company is well-positioned to capitalize on the increasing investments in data centers, as demonstrated by its impressive backlog growth, which saw a 10% increase in the first quarter since the end of 2024.
Owing to strong order activities, the management has revised its full-year organic revenue growth forecast to 18%, up from earlier estimates of 16%. However, they’ve opted to maintain their profit margins and cash flow guidance amid certain uncertainties regarding tariffs. Still, there’s optimism, with hopes of reaching $1.3 billion in free cash flow (FCF) by 2025, with Wall Street projecting figures of $1.65 billion and $1.79 billion for 2026 and 2027, respectively.
Currently, Vertiv’s market capitalization sits at $36.1 billion, trading at 28 times and 22.5 times FCF for 2025 and 2026.
Nvent Expands Utility and Data Center Reach
Nvent provides electrical connection and protection solutions across various sectors, including data centers and power utilities. Recently, management decided to divest its thermal management business and acquired the Electrical Products Group for $975 million, enhancing their presence in these promising markets.
This shift means infrastructure now comprises 40% of Nvent’s portfolio and is its fastest-growing segment. CEO Beth Wozniak noted a robust double-digit growth in organic orders for data solutions in the first quarter, in contrast to the single-digit growth seen in other areas. This growth trajectory led to notable first-quarter organic order increases.
In comparison to Vertiv, Nvent’s first-quarter results also prompted an upward adjustment in annual sales forecasts, now predicting organic growth of 5% to 7%. They’ve even revised their full-year revenue growth expectations from 22% to a range of 26%, unlike Vertiv’s more conservative estimates. Additionally, Nvent anticipates a negative tariff impact of $120 million in its forecasts.
Wozniak emphasized the growth potential in data solutions and power utilities, stating, “This is where growth accelerates.” Despite some concerns regarding potential slowdowns in data center spending, the current demand remains strong.
Wall Street analysts share a positive outlook, projecting Nvent’s earnings to be $3.09 and $3.46 in 2025 and 2026, with FCF expected to be $406 million and $561 million. The anticipated revenue multiples are also appealing, making Nvent an attractive stock option for investors.
