Vertiv Soars on AI Data Center Boom After Crushing Q3 Estimates and Raising Guidance

Vertiv (VRT) delivered the kind of quarter that reminds you why it’s become a core way to play the data center build-out. The digital-infrastructure provider —power, thermal management, and turnkey platforms—put up another clean beat and raised its outlook, with momentum clearly tethered to AI data centers and hyperscale capacity adds. Orders accelerated, backlog swelled, margins expanded, and cash generation improved. No surprise shares are up ~8% premarket: this was a “confirmation” print that the cycle still has legs.

Against expectations, Q3 was strong across the P&L. Revenue rose 29% year over year to $2.68B, beating the Street’s ~$2.59B. Adjusted EPS of $1.24 topped consensus ~$0.99 by ~25%. Organic revenue grew 28% (vs. ~24% est.), and operating leverage showed up: reported operating profit rose 39% to $517M; adjusted operating profit climbed 43% to $596M. That translated to a 22.3% adjusted operating margin—up 220 bps year over year and 380 bps sequentially—while the reported operating margin printed 19.3% (up from 17.9% a year ago). Free cash flow was equally solid at $462M (+38% YoY), aided by higher profitability and lower interest expense; FCF margin ticked up to ~17%.

The demand backdrop is the headline. Organic orders surged ~60% YoY and ~20% sequentially, yielding a book-to-bill of ~1.4x and pushing backlog to ~$9.5B exiting the quarter (vs. $8.5B at Q2-end, itself +21% YoY). Management framed the quarter as continued acceleration in AI-linked power and cooling: the Americas led with +43% organic net sales; APAC was +21%; EMEA remained soft at −4% but is the focus of restructuring to improve throughput and profitability heading into an expected regional recovery in 2H26. CEO Giordano Albertazzi also highlighted share gains and portfolio depth as key reasons Vertiv is winning large, complex programs where scale, systems integration, and reliability are non-negotiable.

Compared to estimates, the company also nudged the near-term outlook above the bar. For Q4, Vertiv guided revenue to $2.81–$2.89B (midpoint ~$2.85B vs. ~$2.82B consensus) and adjusted EPS to $1.23–$1.29 (midpoint in line/slightly above ~$1.25). The operating playbook remains consistent: convert backlog, price for complexity, and drive productivity to offset cost headwinds. Adjusted operating margin is expected at 22.1%–22.7% in Q4, signaling sustained discipline even as volumes rise into year-end.

Full-year guidance moved meaningfully higher. Vertiv now sees FY25 revenue of $10.16–$10.24B (vs. prior $9.93–$10.08B), adjusted EPS of $4.07–$4.13 (prior $3.75–$3.85), adjusted operating profit of $2.04–$2.08B (prior $1.99–$2.06B), and adjusted FCF of $1.47–$1.53B (prior $1.40–$1.50B). Management also flagged 2025 capex of ~$250M, stepping up again in 2026, to expand capacity and ER&D for anticipated revenue growth. Balance sheet flexibility is ample—liquidity of ~$2.7B, net leverage ~0.5x—and ratings momentum improved with a Moody’s upgrade to Ba1.

Key drivers: (1) AI data center demand—large power blocks, advanced thermal systems, and integrated white-space solutions are moving from pilot to program scale, particularly in North America; (2) Pricing and mix—larger, higher-spec orders (and disciplined underwriting) supported margin expansion; (3) Operational execution—manufacturing and procurement productivity, plus targeted footprint changes, lifted profitability. The firm’s 18% five-year CAGR underscores that this isn’t a single-quarter pop; it’s sustained product-market fit in a structurally growing end-market.

Headwinds and watch-items: tariffs partially offset margin benefits this quarter and remain a variable into 2026; EMEA revenue was negative and requires clean execution on the restructuring to position for the expected upturn; and backlog conversion—while healthy—must remain tight to support the raised outlook and cash targets. Additionally, industry capacity adds and supply chain timing (power equipment lead times, complex site integrations) can introduce quarterly lumpiness even in a robust cycle.

Strategically, Vertiv is “leaning in” as demand visibility improves. Management is increasing ER&D to extend leadership in high-density power and liquid/advanced cooling, while expanding manufacturing and services capacity to de-bottleneck delivery. That posture mirrors what we’re seeing from adjacent beneficiaries across the power ecosystem (transformers, grid, and generation), and the read-through is supportive for peers levered to data center electrification and reliability.

Price action and setup: premarket, VRT is up ~7–9% as investors reward the beat/raise and the orders/backlog trajectory. The stock’s backdrop includes a prior-quarter backlog of $8.5B (Q2) that was already impressive; pushing to ~$9.5B with a 1.4x book-to-bill confirms cycle strength, not just one-off wins. With FY EPS marching toward ~$4.10 and mid-20s quarterly margins within sight, the debate shifts from “is the AI cycle real?” to “how long can this run and how high can margins sustain as capacity scales?”

Bottom line: Vertiv executed a classic “beat and raise,” powered by AI-driven data center demand, disciplined pricing, and better productivity. Guidance implies durable momentum into Q4 and 2026, with cash flow tracking higher and balance-sheet risk low. The near-term risks—tariffs, EMEA execution, and backlog conversion—are real but manageable. For now, the tape is telling you what the customers already have: VRT is central infrastructure for the digital age, and the order book says the build-out is far from done.