Key Points
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A plethora of anecdotal evidence, management commentary, and Nvidia’s earnings report suggest spending on data center equipment remains in robust growth mode.
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The AI application market is still in its early innings.
Shares in data center equipment company Vertiv (NYSE: VRT) surged by 19% in June, according to data provided by S&P Global Market Intelligence. The move comes as the market’s concerns over a slowdown in data center capital spending have been assuaged by positive news flow from companies like Vertiv’s partner, data center architecture company Nvidia (NASDAQ: NVDA).
The bulls and bears debate AI/data center spending
No one likes piling into the market at the top of a bull market, especially not in the technology sector, where the cyclicality of boom and bust seems to prevail. For the bears, the boom in data center and artificial intelligence (AI)-related spending is set for a natural correction. Additionally, the uncertainty created by the tariff conflict is perceived as potentially causing a pause in spending on data centers.
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For the bulls, spending on data centers is still in its early innings. In addition, the need for data center capacity to catch up with the demand trend in AI application-related spending will boost spending for many years to come.
In terms of Vertiv, the bears will point to the company’s flat year-over-year order book in the fourth quarter of 2024 as an early indication of stress down the line. Meanwhile, the bulls will point to the fact that Vertiv raised its full-year 2025 sales guidance to a range of $9.325 billion to $9.575 billion, compared to a prior range of $9.125 billion to $9.275 billion, as announced in the company’s first-quarter earnings presentations in April.
What changed in June
To stay informed about developments in the data center and AI market, it’s a good idea to follow the perspectives of hyperscalers and market service providers, as well as examine anecdotal statements and trading conditions. As previously discussed, a host of information suggests that the market remains strong.
Image source: Getty Images.
In addition, Nvidia’s first-quarter 2026 earnings report and management commentary indicated that underlying growth in the market is excellent. For example, Nvidia’s data center-related revenue rose by 73% year over year in the first quarter of 2026.
Moreover, it’s essential to note that while companies like Nvidia are subject to export control regulations on their technology sales to China, Vertiv’s power, cooling, and infrastructure solutions for data centers don’t face the same kind of restrictions. In fact, the major problem Vertiv faces from the tariff conflict is rising costs associated with products sourced from Mexico and China, areas where management is already rebalancing to mitigate risk.
All told, the confirmation of ongoing growth in Vertiv’s end markets was a positive for the stock in June, and it remains a great way to play the data center spending boom.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.