VRT Q2 Deep Dive: AI Data Center Demand, Tariff Pressures, and Strategic Expansion Drive Outlook

Data center products and services company Vertiv (NYSE:VRT) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 35.1% year on year to $2.64 billion. On top of that, next quarter’s revenue guidance ($2.55 billion at the midpoint) was surprisingly good and 5.2% above what analysts were expecting. Its non-GAAP profit of $0.95 per share was 13.9% above analysts’ consensus estimates.

Is now the time to buy VRT? Find out in our full research report (it’s free).

StockStory’s Take

Vertiv’s second quarter results were marked by robust growth in data center infrastructure demand, especially from hyperscale and colocation customers in the Americas and Asia-Pacific regions. Management credited ongoing investments in engineering, research and development, and increased manufacturing capacity for enabling the company to meet surging order volume. CEO Giordano Albertazzi noted that organic sales rose sharply, supported by backlog expansion and healthy pipelines across all segments. Operational challenges, such as higher costs related to tariffs and supply chain transitions, weighed on margins but were described by management as temporary and expected to moderate by year-end.

Looking ahead, Vertiv’s updated guidance is shaped by expectations of continued strength in AI-driven data center demand and a gradual easing of margin pressures. Management highlighted ongoing investments in engineering, R&D, and capacity expansion to support accelerated growth rates. Albertazzi explained, “We are deliberately increasing spending in engineering and R&D, capacity and go-to-market to fuel growth,” while also addressing near-term costs from supply chain and tariff adjustments. The company believes these factors position it to capture long-term opportunities as AI infrastructure investment accelerates globally.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to a combination of robust order momentum, targeted investments in technology, and operational execution, while acknowledging the impact of tariffs and ongoing supply chain adjustments.

• Strong order momentum: Vertiv saw orders rise 15% year-on-year in the quarter, with the Americas and APAC leading growth driven by hyperscale and colocation customers seeking advanced infrastructure for AI workloads. The book-to-bill ratio reached 1.2x, and backlog expanded, supporting future revenue visibility.
• Tariff and supply chain headwinds: Management cited tariffs and the transition to a tariff-optimized supply chain as the primary drivers of lower operating margin. Temporary costs included premium freight and manufacturing inefficiencies as the company shifted sourcing and production footprints to offset tariff impacts.
• Technology and product portfolio expansion: The company highlighted progress in integrating its traditional “gray space” (power and cooling infrastructure) with “white space” (IT racks and compute equipment), emphasizing its SmartRun solution and increased focus on prefabricated, modular data center components.
• Strategic acquisition: Vertiv announced its pending acquisition of Great Lakes, a provider of high-end data center racks and cabinets. Management expects this transaction to bolster its capabilities in white space infrastructure and accelerate fulfillment for demanding AI and cloud environments.
• Operational execution challenges in EMEA: While EMEA sales rose, management acknowledged ongoing execution issues and deliberate investments in fixed costs and capacity ahead of expected regional growth. These were described as near-term headwinds that should normalize as sales accelerate in future periods.

Drivers of Future Performance

Vertiv’s outlook is underpinned by accelerating AI infrastructure demand, ongoing investment in capacity and R&D, and expected normalization of margin pressures as supply chain and tariff impacts stabilize.

• AI and data center demand: Management sees sustained growth from hyperscale, colocation, and emerging “neocloud” customers as AI adoption drives higher rack density and more complex data center builds. CEO Giordano Albertazzi emphasized partnerships with key technology providers and customers, such as CoreWeave and Dell, to stay ahead of evolving requirements.
• Margin recovery initiatives: The company is actively working to resolve temporary operational inefficiencies linked to tariffs and rapid production scaling. CFO David Fallon expects operating margins to recover in the fourth quarter as supply chain transitions are completed and higher sales volumes drive better cost leverage.
• Strategic investments and regulatory trends: Vertiv is increasing spending on engineering, R&D, and go-to-market activities to secure long-term growth. Management also pointed to improving regulatory environments in North America and Europe as supportive of future AI infrastructure investment, with EMEA positioned for a rebound as government support for data centers and power generation grows.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will be monitoring (1) Vertiv’s ability to resolve operational inefficiencies and realize margin improvement as supply chain and tariff transitions are completed, (2) continued momentum in AI-driven orders and backlog conversion to revenue, and (3) progress integrating the Great Lakes acquisition to expand white space product capabilities. Additionally, we will keep an eye on regulatory developments and capacity expansion initiatives in EMEA, which could drive a rebound in that region.

Vertiv currently trades at $143.97, in line with $142.82 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

Now Could Be The Perfect Time To Invest In These Stocks

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.