Shares of Vertiv Holdings (NYSE:VRT) fell sharply by as much as 14% on Thursday, diverging from the broader industrial sector (XLI). This selloff followed media reports suggesting that Amazon (NASDAQ:AMZN) had entered the liquid cooling market, potentially positioning itself as a competitor in the fast-growing space of AI server infrastructure. Investors responded swiftly, likely out of concern that Amazon’s scale and resources could undercut Vertiv’s growth prospects in this niche but emerging market.
UBS Analyst Urges Calm, Sees Amazon as Partner Not Direct Competitor to Vertiv
UBS analyst Amit Mehrotra responded to the drop by encouraging investors not to overreact to the news. In a client note dated July 11, he reiterated a Buy rating on Vertiv’s stock, arguing that the selloff was disproportionate to the actual risk posed.
Mehrotra acknowledged that while liquid cooling currently makes up a small portion of Vertiv’s revenue, it is integral to the company’s future growth story — a fact that makes investor sensitivity to competition understandable, though not necessarily justified.
Amazon’s Liquid Cooling Entry Sparks Vertiv Selloff Despite Potential for Strategic CollaborationMehrotra challenged the assumption that Amazon is entering the market as a direct competitor. He emphasized the significant technical and manufacturing complexity required to develop a complete liquid cooling solution.
These include producing specialized parts like coolant distribution units and radiators, which are unlikely to be Amazon’s focus. Instead, he suggested Amazon is more plausibly collaborating with existing players such as Vertiv to integrate and deploy efficient rack-scale cooling systems for AI data centers.
Strategic Collaboration Likely as AI Demand Grows, Strengthening Vertiv’s Market Position
UBS highlighted the longstanding business relationship between Vertiv and Amazon, implying potential collaboration rather than competition. Mehrotra noted that if Amazon is indeed working alongside Vertiv to develop advanced cooling systems, the development would be a net positive for Vertiv.
These integrated rack-scale solutions are critical as AI workloads place increasing demands on data center infrastructure, pushing traditional rack systems to their limits.
Concluding his analysis, Mehrotra reaffirmed UBS’s optimistic outlook for Vertiv. He cited accelerating demand for AI-related infrastructure and continued order growth as key drivers of future performance.
The analyst emphasized that prior dips in Vertiv’s stock, driven by similar concerns, were followed by strong recoveries — a pattern he believes will repeat. With the sector shifting toward integrated systems, Vertiv is seen as well-positioned to capitalize on both market expansion and strategic partnerships.
