Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell

3. Vertiv Holdings Co (NYSE:VRT)

Number of Hedge Fund Investors: 92

When asked about Vertiv Holdings Co (NYSE:VRT), Cramer said that Vertiv stock has “come down enough.”

“I’ve had it with the sellers. They’ve got to recognize that the time to sell Vertiv has come and gone.”

Vertiv Holdings Co (NYSE:VRT) is a market leader in the data center power and cooling market, which has nowhere to go but up from here since companies are hungry for data center solutions as they begin to deploy AI software.

Vertiv Holdings Co (NYSE:VRT) is forming long-term partnerships with Intel and Nvidia to develop tailored solutions for their products. This is especially notable because AI training requires significantly more electricity and produces more heat than traditional servers, driving demand for specialized systems that Vertiv Holdings Co (NYSE:VRT) provides. The company estimates that the additional demand from AI could boost its top-line growth by up to 4% annually.

By designing products specifically for Nvidia’s GPUs, Vertiv can tap into Nvidia’s growth with minimal effort, as their systems are crucial for optimizing GPU performance. If Nvidia powers data centers with its processors, Vertiv provides the infrastructure that keeps them running efficiently.

Vertiv Holdings Co (NYSE:VRT) revenue has grown on average at 10% in the most recent quarters. The company has a backlog of over $7 billion, more than a year’s worth of current revenue. Vertiv is targeting a 20% operating margin by 2028.

Baron Small Cap Fund stated the following regarding Vertiv Holdings Co (NYSE:VRT) in its Q2 2024 investor letter:

“Vertiv Holdings Co (NYSE:VRT) a leading provider of critical digital infrastructure for data centers, contributed during the quarter. As an industry leader in data center cooling and power management, Vertiv is poised to benefit from AI-driven growth in data center spend. The NVIDIA partner network, strong industry relationships, and broad product portfolio that Vertiv maintains enables its participation in the creation of the technology roadmap for the future of the data center. In addition, Vertiv is investing in its capacity to serve this growing end market more effectively. The company also has an extensive global service network to aid customers as they grow. We believe the company has durable competitive advantages and a flexible balance sheet to benefit from the expected significant capital investment in data centers for years to come. Vertiv reported very strong results for the March quarter, with orders up 60%, which highlighted the strong demand it is seeing for its products. We sold some of our position into strength after the runup from the positive report, but still hold a major position in the Fund as we see considerable upside in the shares over time.”