Vertiv Stock Rebounds: Why the AWS Cooling Move Misses the Bigger Picture

The recent volatility in Vertiv (VRTX) stock following Amazon Web Services' (AWS) announcement of its in-house cooling system for AI data centers has created a buying opportunity. While the news sent shares down 11% on fears of reduced reliance on third-party suppliers, the reality is far more nuanced. Vertiv's diversified customer base, AI-driven innovation pipeline, and the relentless tailwinds of the hyperscaler buildout make this a prime example of the market overreacting to a niche competitive move. Let's dissect why the long-term story remains compelling—and why now could be a time to buy.

Why the AWS Move Doesn't Spell Doom for Vertiv

AWS's introduction of its proprietary In-Row Heat Exchanger (IRHX) system—a hybrid liquid-air cooling solution designed for Nvidia's Blackwell GPUs—has naturally raised concerns. After all, Vertiv derives roughly 10% of sales from liquid cooling solutions, and AWS is a major customer. But here's the key detail: Vertiv isn't being cut out of the equation. Instead, it's supplying critical components for AWS's IRHX, including water distribution cabinets, pumping units, and fan coils. As Evercore ISI noted, this underscores Vertiv's role as an indispensable partner in the complex, vertically integrated world of hyperscale infrastructure.

AWS's move is part of a broader industry trend where cloud giants like Microsoft and Google are designing custom hardware to optimize performance. But this doesn't negate the need for specialized infrastructure suppliers. Even as AWS builds its own cooling systems, it still requires Vertiv's expertise in thermal and power management. The IRHX's 11-month development timeline—fast by industry standards—also highlights that AWS isn't abandoning third-party vendors but is instead deepening partnerships to accelerate innovation.

The Backlog Booms, and Analysts Are Buying In

The market's knee-jerk reaction ignores the massive backlog growth fueling Vertiv's resilience. As of Q1 2025, Vertiv's backlog hit $7.9 billion, up 25% year-over-year and 10% sequentially. This isn't just AWS-driven demand—it's a reflection of hyperscalers like Google, Microsoft, and Meta ramping up AI infrastructure, plus colocation providers expanding data center capacity.

The first-quarter book-to-bill ratio of 1.4x signals strong order momentum, and Vertiv has already raised its full-year sales guidance by $250 million to a range of $9.3–9.6 billion. Analysts are taking notice: the average price target remains a robust $120.56, with some estimates hitting $150. Evercore ISI's Outperform rating and Bloomberg's acknowledgment of Vertiv's critical role in AWS's supply chain underscore this optimism.

Three Tailwinds Propelling Vertiv's Resilience

1. AI-Driven Infrastructure Buildout: The race to deploy AI at scale is real. Vertiv's partnerships, like its reference designs with NVIDIA for the GB200/GB300 platforms, position it at the center of this boom. The iGenius project in Italy—a modular, AI-ready data center built with Vertiv's cooling and power tech—is a blueprint for how the company is scaling globally.
2. Diversified Customer Base: While AWS's move grabbed headlines, Vertiv's top clients span hyperscalers, telecoms, and enterprise data centers. In Q1, hyperscaler demand alone contributed to a 25% year-over-year revenue jump. This breadth shields Vertiv from overreliance on any single customer.
3. Global Expansion and Sustainability: Vertiv's footprint isn't limited to the U.S. It's investing in Australia ($13 billion by 2029), India (300 MW capacity by 2032), and Europe, where it's supporting AWS's first Austrian cloud region. Meanwhile, its focus on sustainable cooling solutions—like the $1.2 million solar project in Oregon—aligns with hyperscalers' green mandates.

The Short-Term Volatility vs. Long-Term Opportunity

The AWS news created a buying opportunity for those willing to look beyond the headlines. Consider this: even if AWS's in-house cooling reduces Vertiv's liquid cooling sales by a percentage point or two, the company's total addressable market—$30 billion and growing—is too vast to ignore.

Vertiv's stock trades at a forward P/E of ~25, a discount to its peers given its growth trajectory. With a net leverage ratio of just 0.8x and $2.3 billion in liquidity, the company is financially strong to weather any short-term headwinds.

Bottom Line: Buy the Dip

The AWS cooling system isn't a death knell—it's a feature, not a bug, of a maturing industry. Vertiv's backlog, global partnerships, and innovation pipeline suggest it's here to stay. With AI infrastructure spending projected to hit $400 billion by 2027, Vertiv's role as the “unsung hero” of hyperscale cooling and power management makes it a buy now.

Investment Takeaway: Aggressively accumulate shares of Vertiv on dips below $100. The AI buildout isn't slowing down, and Vertiv's diversified growth drivers ensure it stays in the driver's seat—even as giants like AWS innovate around it.