Key Takeaways

Vertiv Holdings ( VRT ) shares tumbled nearly 10% Wednesday on concerns soaring demand for its cooling systems for artificial intelligence (AI) data centers will slow.

Vertiv said it expects current-quarter adjusted earnings per share (EPS) between $0.57 and $0.63, with a midpoint below the $0.62 anticipated by analysts surveyed by Visible Alpha. The company also explained that its guidance does not take into account "potential impacts from recent policy changes or considerations by the new U.S. Administration, including tariff and corporate tax policies, or countermeasures by other governments."

The outlook offset strong fourth-quarter earnings. Vertiv reported adjusted EPS of $0.99, with revenue rising 26% year-over-year to $2.35 billion. Both exceeded forecasts. The company noted that its pipeline increased from the third quarter, "reflecting strength in data center project activity."

CEO 'Confident in the Growth Trajectory of Vertiv'

CEO Giordano Albertazzi said as AI technology becomes more pervasive, the need for data centers will climb, and as a result he is "confident in the growth trajectory of Vertiv." Albertazzi added that in "an increasingly advanced and efficient data center industry, we continue to bring the critical digital infrastructure technology, speed and scale needed to support this rapidly growing market."

Along with others in the U.S. AI sector, shares of Vertiv sank late last month on word Chinese startup DeepSeek produced an AI platform using much less expensive chips than those by American companies. The stock price has recovered somewhat from that slide, and even with today's 9% decline they've added more than 80% of their value in the last year.

Read the original article on Investopedia