VRT is an attractive long-term opportunity: at 33x earnings versus a 31x average, earnings growth of 36% next year and 27% after leaves a PEG under one and could yield about 40% upside if the multiple holds. It wins whichever AI chip wins, but capex cuts would hurt.

The first stock will be Vertiv, and the trading symbol is VRT. This is a company that I believe has one of the most interesting positions in the AI infrastructure market.

Looking at this FastGraphs chart , you can see that the company rose by 26% in 2024. But here lies the real benefit of FastGraphs, because as you can see on the right, the average typical price-to-earnings ratio for this company over the period you are looking at is around 31 times.

The stock is currently trading at a slightly higher price of 33 times that . But if earnings continue to grow and the stock continues to justify this multiple, then again, we are not even talking about an expansion in the multiple by any means.

This would be a stock that grows by approximately 40% from its current levels. I don't know about you , but I love these returns.

Here's another look at the forecasts tab in FastGraphs. Let's assume that the stock is worth, for example, only a multiple of 29.5 times. We are still talking about a stock with a potential upside of over 30% from current levels based on upcoming earnings growth .

Vertiv provides vital infrastructure used in data centers. This includes energy management, thermal management, liquid cooling, and other services required to operate all these facilities .

As AI-based computing systems become more powerful , these requirements have become more important. Traditional data centers were not necessarily designed to handle the energy intensity of modern AI computing systems.

If you ever enter one of these data centers, which I'm guessing many of you haven't , there are thousands of graphics processing units (GPUs) working overtime and requiring enormous amounts of power .

So, with all this energy, these things can get very hot. This heat needs to be managed. Cooling systems are just one of the elements offered by Vertiv. Otherwise, the equipment cannot operate efficiently or reliably.

Therefore, companies building AI data centers need more than just advanced semiconductors. It needs infrastructure to support it. I believe this is one of the biggest opportunities available to Vertiv.

Now, let's return to my Investors'Edge website, which is available to all subscribers in my private community, and you can see a completely different picture than what we saw with companies like CoreWeave.

Vertiv boasts a financial health score close to 80, a net debt of just 0.2, which is very strong, and a quick ratio above one. It's fine for companies to have debt, but the question is: do they have the liquidity, and more importantly , the cash flow to help pay off that debt? When we look at Vertiv, the answer is yes.

Now turning to earnings, you can see that the company’s profits are expected to grow by 36% next year, and by 27% the year after that. However, the stock is trading at a multiple in the low thirties, meaning that this stock has a "PEG" ratio of less than one.

The price you pay compared to the expected profit growth is very attractive.

But here's the part I find most convincing in this investment thesis. Vertiv doesn't need to predict which AI chip manufacturer will ultimately win. Whether companies use Nvidia processors, AMD accelerators, or custom AI chips, all of these systems require power and cooling.

As computing demands continue to increase, infrastructure requirements may become even more important.

Now, this does not mean that Vertiv is immune to any slowdown in the field of artificial intelligence. If major technology companies cut capital spending or postpone data center projects, it could affect Vertiv's future growth.

Therefore, it is important to consider the various valuation factors and ensure that there is a safety margin from an earnings perspective to counter any potential slowdown. As for Vertiv, I think that's the answer.

But here's my approach to dealing with it . I believe Vertiv offers an attractive long-term opportunity. If the stock continues to decline while the underlying business remains strong, I want that type of company in my investment portfolio.

I don't claim that we know where the bottom will be, and I certainly won't put all my eggs in one basket. But for investors looking to capitalize on the continued expansion of AI infrastructure, and those seeking a high- quality AI company, I believe Vertiv deserves serious consideration.

Vertief provides vital energy and cooling infrastructure. Owning all three does not necessarily mean you are diversified, because all three companies have significant exposure to the same basic investment cycle in AI infrastructure.

If capital expenditures for artificial intelligence continue to grow, these companies will perform well. They will all benefit. But if spending slows down significantly, and that is the key word, the three companies could face some pressure.

Currently, there are three companies that are of particular interest to me: Vertiv, Nvidia , and Broadcom.