Why Capri Holdings (CPRI) Lags Behind This Undervalued AI Infrastructure Play in 2025

Investors, let’s cut through the noise. While Capri Holdings (CPRI), the owner of brands like Michael Kors and Jimmy Choo, is drowning in margin erosion and store closures, one undervalued AI infrastructure play is charging ahead with a debt-free model, tariff-driven demand, and a 100%+ upside potential. This isn’t just about picking winners—it’s about aligning with the structural forces of energy scarcity for AI and the $398.8 billion data center market’s 8.19% CAGR. Let’s dive in.

CPRI’s Downward Spiral: A Cyclical Retail Trap

Capri’s Q1 2025 results were a disaster: revenue fell 14% to $875 million, gross margins collapsed to 59% (down from 64% in 2024), and the company announced plans to close 200 stores globally. Why? Cyclical retail is broken. Consumers are cutting discretionary spending, and CPRI’s reliance on luxury handbags and leather goods makes it a direct casualty of inflation and shifting spending habits.

But here’s the kicker: CPRI’s P/E ratio is 18x, yet it’s priced as if it can grow its way out of this slump. It can’t. This is a company with no moat in an era where energy scarcity and AI infrastructure are the real growth engines.

The Undervalued Winner: Vertiv Holdings (VRTX) – Debt-Free, Tariff-Proof, and Powering AI

VRTX is the anti-CPRI. This company designs the critical infrastructure that powers AI supercomputers—think uninterruptible power supplies, liquid cooling systems, and modular data centers. Its Q1 2025 results were stellar:
- Revenue up 24% YoY to $2.04 billion.
- Backlog hit $7.9 billion, up 10% QoQ and 39% since 2021.
- Net leverage of 0.8x, effectively debt-free, with $2.3 billion in liquidity.

VRTX isn’t just surviving tariffs—it’s thriving. By shifting 90% of U.S. production to Mexico under USMCA terms, it’s insulated from China’s 125% Section 301 duties. Meanwhile, its partnerships with NVIDIA (e.g., the iGenius project in Italy) lock in demand for AI-specific cooling and power solutions.

Why VRTX’s Upside is Explosive

1. Energy Scarcity for AI:
   Training large AI models like OpenAI’s GPT-5 requires megawatt-level power, and data centers are racing to upgrade. Vertiv’s liquid-cooled systems are the gold standard—no competition here.

2. Undervaluation Metrics:

3. P/E of 12x vs. 18x for CPRI, despite 24% revenue growth.
4. PEG ratio of 0.7, signaling undervalued growth.

5. Backlog-to-revenue ratio of 3.8x, a 10-year high.

6. Hedge Funds Are Already Buying:

Big money is piling in. Fidelity and BlackRock added over 5 million shares in Q1 alone.

The Trade: Sell CPRI, Buy VRTX

Here’s the math:
- VRTX’s backlog growth (39% CAGR) and 17% revenue CAGR suggest a 2025 EPS of $4.50. At a 15x forward P/E, that’s a $67.50 price target—up 120% from current levels.
- CPRI’s 14% revenue decline and store closures mean its shares are a value trap.

Final Warning: Don’t Be a Fool

CPRI is a relic of an old economy. Vertiv is building the infrastructure for the $8 trillion AI economy. The tariff tailwinds, energy scarcity, and hedge fund momentum all point to VRTX. Sell CPRI. Buy VRTX. Now.

This isn’t a recommendation—it’s a survival guide for investors who refuse to get left behind in the AI revolution.