Hyperscale cloud computing operators Microsoft and Meta Platforms provided more evidence that the rapid buildout of AI data centers isn't losing steam. The trend is positive for data center infrastructure firms Vertiv and Applied Digital.
Late Wednesday, Microsoft and Meta Platforms separately disclosed heightened spending on data centers to support their artificial intelligence plans.
The "big AI buildout is not slowing down," Jefferies analyst Brent Thill said in a client note. He expects an increase in capital expenditures across the industry of more than 50% this year.
Collectively Microsoft, Meta, Amazon, Google parent Alphabet and Oracle will spend an estimated $381 billion in capex in 2025, up 50% from last year. That doesn't include data center projects from "neoclouds" such as OpenAI and xAI.
On Wednesday, Vertiv and Applied Digital each reported quarterly results that beat expectations. Vertiv provides power, cooling and other infrastructure for data centers and industrial facilities. Applied Digital designs, builds and operates digital infrastructure for high-performance computing and AI applications.
On the stock market today, Vertiv stock rose 1% to close at 145.60. Applied Digital stock rocketed 31% to 13.14.
In an interview with Investor's Business Daily, Vertiv Chief Executive Giordano Albertazzi said his company's AI data center orders are robust.
"Certainly the data center market continues to be strong," he said. "Something we're very happy about is our orders trend … It was nice for us to hit and indeed pass the $3 billion order number per quarter" in the second quarter.
He added, "That gives us a strong backlog. Our backlog on a year-to-year basis is up 21%." Vertiv's backlog now totals $8.5 billion.
Vertiv stock is on three IBD lists: IBD 50, Big Cap 20 and Leaderboard.
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