Here's why shares of this Nvidia affiliate rose more than 20% this week

Data center equipment company and Nvidia partner Vertiv Holdings (NYSE: VRT) can't do anything wrong. The stock is up as much as 561% since the start of 2023 and is up another 20.5% in the week through Friday morning, according to data from S&P global market information.

The latest move comes after Vertiv posted a stellar set of first-quarter earnings results, which saw the company beat management expectations, raise full-year expectations and report 60% growth in organic orders.

Vertiv's growth momentum

The company's growth is driven by spending on data centers and, in turn, by heavy investments in artificial intelligence (AI) applications.. While it has become a favorite theme among investors, Vertiv has the order growth to back up the optimism.

Here are some highlights from the quarter:

  • Organic revenue increased 8% to $1,639 million, compared to expectations for a 5% organic increase.

  • Adjusted operating profit of $249 million, compared to guidance of $210 million.

  • Full-year revenue expectations have been increased to 12% organic growth, compared to 10% previously.

  • Adjusted full-year operating profit guidance has been increased from $1.3 billion to $1.35 billion.

Frankly, it's hard not to think that management is being conservative when it comes to leadership. After all, first quarter adjusted operating profit exceeded internal expectations by $39 million, and organic orders grew 60%. By comparison, management only increased full-year adjusted operating profit by $50 million.

A person smiles and clenches his fists against a blue background.A person smiles and clenches his fists against a blue background.

Image source: Getty Images.

More growth is coming

Additionally, CEO Giordano Albertazzi noted that “most orders in the first quarter are for deliveries after '24.” As such, it is reasonable to expect that investors will start to expect significantly higher profits before 2025. The stock received a slew of analyst upgrades in the days following the results, with analysts citing the early-cycle nature of the AI ​​spending boom.

Investors will hope they are right; If so, the stock will likely continue its remarkable run.

Should You Invest $1,000 in Vertiv Now?

Before purchasing shares in Vertiv, consider the following:

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Nvidia. The Motley Fool has one disclosure policy.

Here's why shares of this Nvidia affiliate rose more than 20% this week was originally published by The Motley Fool

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