Artificial intelligence (AI) has a major bottleneck, and it isn’t limited to chips, servers, or memory. Estimates suggest that trillions in investment will be needed to build the power infrastructure to support data centers in the coming years.
That’s good news for investors who feel like they missed the early innings of the AI bull market. AI is still in its infancy compared to what it could become over the next 30 years, and companies that supply the power and cooling behind the scenes could be positioned for years of growth.
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Two leaders in this space, Vertiv Holdings (NYSE: VRT) and GE Vernova (NYSE: GEV), have already seen their share prices soar 102% and 65%, respectively, this year. Here’s why they should continue to outperform the market through the end of the decade, and likely beyond.
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Vertiv Holdings
The unprecedented investment pouring into data centers powered by graphics processing units (GPUs) is driving higher demand for power management and cooling systems. Vertiv is a leader in this market and has deep relationships with leading hyperscalers.
Its first-quarter revenue was up 30% year over year, which is the level of growth you want to see to outperform the S&P 500 index, which has historically returned about 10% annually over many decades. Vertiv’s revenue increase has accelerated during the AI boom over the past three years.
“Our pipeline generation is robust, and we’re still expecting another year of strong order performance in 2026,” CEO Giordano Albertazzi said during the quarterly earnings call. Following its strong start to the year, management raised its full-year guidance and now expects sales to rise between 29% and 31% year over year.
Vertiv’s competitive moat is largely built on its scale and ability to fulfill large orders, particularly for complex data center requirements. The consulting firm McKinsey estimates that global data centers could require over $6 trillion of investment by 2030, which could lead to a substantial increase in orders for Vertiv.
Its valuation reflects the positive outlook, with the shares trading at a high forward price-to-earnings (P/E) multiple of 51. Earnings are also expected to grow at an annualized rate of 32%. Even allowing for the possibility that the market re-rates the stock at a marginally lower earnings multiple, there is enough earnings potential for the stock to at least double in value by 2030 and outperform the market.
GE Vernova
Gas turbines are a crucial component in delivering power to data centers. The demand for the largest units is so high that the reported wait times for new orders are a minimum of five years. GE Vernova is a leading supplier of gas turbines and other technology and services to run a modernized electricity grid.
The company has significant scale, with its installed base of technologies helping deliver 25% of the world’s electricity. Revenue increased 16% year over year in the first quarter, and rose 7% excluding the impact of acquisitions, business sales, and foreign currency translation. However, the most telling number showing how much demand remains ahead is the huge backlog of orders, which rose 71% year over year in the first quarter to $163 billion.
This backlog is why the stock is likely to continue rising in value and outperform the market. CEO Scott Strazik said on the recent earnings call, “Delivering on our growing backlog in the second half of this decade will lead to a larger and even more profitable service book that will benefit us in the 2030s and beyond.” That points not only to increasing revenue but also to substantial earnings growth.
Goldman Sachs projects global power demand from data centers to rise 165% from 2023 levels by 2030. GE Vernova is one of the best stocks to ride this opportunity. Its high forward P/E of 71 is supported by stable, growing electricity demand, a long order book, and earnings increase expectations of about 31% annually.
The main risk for these power infrastructure stocks would be a slowdown in data center investment or the entire economy. Either scenario would likely send these stocks lower, but that would be a temporary slump. Over the long term, AI data centers will need more electricity, not less. Vertiv and GE Vernova are strong stocks to ride this megatrend.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GE Vernova, Goldman Sachs Group, and Vertiv. The Motley Fool has a disclosure policy.
