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Power usage effectiveness – PUE – will be the acronym of the future on Wall Street. You see, artificial intelligence has an insatiable appetite for data and electricity. Heat is the enemy, both to the equipment and the bottom lines of data centers. Fortunately, Vertiv Holdings Co. (VRT) has a solution, says Matthew Carr, editor of Tipping Point Profits.

In a typical data center, hyperscalers require 10-14 kilowatts (kW) per rack to operate. That demand is difficult enough to meet with the already exhausted US power grid. But data centers are upgrading to AI-ready racks. And due to their powerful GPUs, like those manufactured by Nvidia Corp. (NVDA), these need 40-60kW to operate.

By 2030, US data center power demand is projected to more than double to 35 gigawatts (GW). And by then, data centers will account for as much as 8% of global electricity demand. The technology is driving American and global power grids to the brink.

But as these power-hungry GPUs gorge themselves on data and electricity, they give off something else that’s causing quite a problem -- heat. And that brings us back to PUE.

PUE is a ratio of the total amount of power used by a data center to the power delivered to the actual computing equipment. It considers how much power is being used for servers, storage, HVAC, pumps, cooling, and various other equipment.

The ideal ratio is 1.0. That means every bit of juice transmitted to that data center feeds the racks and networking gear. Well, the average PUE for data centers is currently 1.8. So, how does a data center bring their PUE in line?

Currently, 40% of a data center’s budget doesn’t go to buying the fanciest chips or running the latest and greatest software. It goes to cooling down all of those power-hungry server racks -- which are running hotter than ever.

That’s where Vertiv comes in. Power management solutions represent 32% of Vertiv’s sales. But thermal management solutions – like liquid cooling – currently account for 30% of the company’s revenue. And growth from this segment is projected to outpace the market as rack density increases and the demand for heat collection and protection rises rapidly.

Vertiv provides direct-to-chip cooling solutions, cooling distribution units, and immersion tank modules. This is the type of equipment data centers need to be able to operate AI effectively. And Vertiv is co-developing cooling products with the biggest name in AI – Nvidia.

Revenue growth is already in the double digits. And for 2025, Vertiv sees its data center segment demand accelerating across the globe, resulting in another double-digit increase in sales. All thanks to the heat AI is generating.

About the Author

Matthew Carr is the founder of First Bar with Matthew Carr, where he writes about all things money. He is also currently the trend investing strategist at Money Map Press.

For more than 13 years he served as chief trends strategist for The Oxford Club, earning ten awards for portfolio performance and trades of the year—more than any other strategist in the company's history. His strategic approach focuses on high-growth, pre-momentum companies trading at steep discounts.

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