Should You Buy Vertiv Stock For Its Widening Margin Despite Delivery Doubts?

Vertiv, a company that provides power and cooling systems for AI data centers, is trading near $240, having risen 64% from its 52-week low. Over the past year, its stock has climbed 73%. However, delivery concerns have arisen, as some large project revenue fell out of the second quarter of 2026. Despite this, the company's operating margins have been expanding over the last three years.

Three years ago, Vertiv's operating margin stood at 9.6%, and it has since increased to 15.1%, 17.4%, and 19.4% in the last twelve months, effectively doubling its profit per dollar of sales. Management attributes this growth to productivity gains and pricing that have outpaced costs, even with tariffs. The second-quarter revenue dip did not translate into a profit margin slowdown, as adjusted operating profit beat expectations.

Management attributes this to temporary issues related to multiphase project execution and supply chain congestion. The CEO asserts that Vertiv has overcome past difficulties, including those in Ireland and with busbar switchgear. However, the company acknowledges that complexity is increasing, and management's guidance for the second half of 2026 already accounts for potential ongoing congestion.

Sales in the second quarter of 2026 rose 24% year-on-year, with the company expecting a 40% increase in sales for the third quarter of 2026, compared to the previous year. The stock's valuation appears to assume the margin will continue to widen. In light of the steep sales ramp-up, the success of this strategy will be crucial in determining Vertiv's future performance.