Shares in data center equipment company Vertiv (NYSE: VRT) surged by 19% in June, according to data provided by S&P Global Market Intelligence. The move comes as the market’s concerns over a slowdown in data center capital spending have been assuaged by positive news flow from companies like Vertiv’s partner, data center architecture company Nvidia (NASDAQ: NVDA).
No one likes piling into the market at the top of a bull market, especially not in the technology sector, where the cyclicality of boom and bust seems to prevail. For the bears, the boom in data center and artificial intelligence (AI)-related spending is set for a natural correction. Additionally, the uncertainty created by the tariff conflict is perceived as potentially causing a pause in spending on data centers.
For the bulls, spending on data centers is still in its early innings. In addition, the need for data center capacity to catch up with the demand trend in AI application-related spending will boost spending for many years to come.