VRT retains its Outperform rating, but the halo effect has faded and the target price is cut to $368

Overview

This report reviews Vertiv Holdings Co's 2Q26 results from Bernstein. Its core conclusion is that Vertiv continues to benefit from AI data center construction, a strong order pipeline, and demand for power and thermal management infrastructure, but revenue growth came in below elevated expectations this quarter, prompting the market to reassess its premium valuation amid supply-chain execution issues and slower 800V DC product progress.

Core views

Bernstein maintains its Outperform rating on VRT because demand remains strong, deferred revenue increased substantially, the long-term earnings growth path remains attractive, and the stock's post-earnings decline has made its valuation cheaper. However, the report clearly notes that the "halo effect" supporting VRT's high multiple in recent years has faded: 18% organic growth was below expectations, and 3Q and 4Q guidance relies heavily on accelerated deliveries in the second half; the supply-chain complexity of prefabricated solutions has increased, and a delay in a single component can affect shipments of high-value modules; 800V DC/SST remains in development, while some competitors have already begun testing with hyperscalers, weakening VRT's narrative of R&D leadership.

Analysis framework

The report assesses the situation using 2Q26 actual results, market consensus expectations, management guidance, order and deferred-revenue indicators, supply-chain execution commentary, 800V DC technology progress, and changes in valuation multiples. For valuation, it applies an EV/NTM EBITDA framework, lowering the target multiple from 32x to 27x and rolling the EBITDA forecast forward by one quarter to derive a $368 target price.

Methodology notes

• Valuation methodsEV/NTM EBITDA

  Valuing the company by multiplying next-twelve-month EBITDA by a target enterprise value multiple

  Bernstein lowered Vertiv's valuation multiple from 32x EV/NTM EBITDA to 27x to reflect execution uncertainty and the retreat in its premium valuation; the report states that a 27x NTM+1 EBITDA of approximately $5.3bn implies a $368 target price.

• earnings reviewactual vs consensus

  Comparing actual results with market expectations

  Revenue was below consensus, while EPS and adjusted operating margin were above expectations, indicating good earnings quality but weaker growth delivery than the market's high expectations for VRT.

• order proxydeferred revenue as orders indicator

  Using deferred revenue to assess order momentum

  Because VRT no longer discloses quarterly orders, investors use deferred revenue as an indirect indicator of order growth; deferred revenue increased by more than $1.2bn in 2Q, suggesting strong orders, but the revenue contribution is more likely to emerge in 2027.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• VRT.US

  Covered company; supplier of AI data center power, thermal management, and infrastructure

  Strengths

  Strong demand, substantial deferred-revenue growth, better-than-expected margin performance, a data center infrastructure pipeline spanning the Americas, EMEA, and APAC, and continued investment in thermal management, services, and converged infrastructure.

  Weaknesses

  2Q26 organic growth was significantly below elevated expectations, the prefabricated solutions supply chain is complex, 800V DC/SST progress is relatively slow versus peers, and the premium valuation has been impaired.

  Comparison

  The report notes that some peers have already begun testing SST/800V DC with hyperscalers, while VRT remains in the product development stage; most data center-related companies also have second-half revenue back-end-loaded, but many delivered better 2Q progress than VRT.

  Risks

  Supply-chain recovery slower than expected, insufficient second-half revenue delivery, falling behind in 800V DC technology, and a slowdown in data center expansion or lower cooling demand.

Key data

• 2Q26 revenue$3.274bnBelow consensus of approximately $3.372bn; approximately 24% year-over-year growth and approximately 18% organic growth.
• 2Q26 adjusted diluted EPS$1.52Above the market expectation of approximately $1.42; $0.95 in the same period of 2025.
• 2Q26 adjusted operating margin22.6%Approximately 100bps above expectations.
• 3Q26 revenue guidance midpoint$3.750bnImplies approximately 35% organic growth, which the report considers relatively back-end-loaded and demanding to execute.
• FY2026 revenue guidance midpoint$14.0bnRaised by approximately $250mn from previous guidance.
• FY2026 EPS guidance$6.70Bernstein's adjusted EPS forecast for 2026E is $6.60 in the report's appendix.
• Change in deferred revenueIncrease of more than $1.2bnSignificantly above the usual quarterly increase of several hundred million dollars, suggesting strong order growth.
• Valuation multiple27x EV/NTM EBITDAReduced from 32x, reflecting the difficulty of recovering peak valuation multiples.
• Target price$368.00Prior $416.00; Outperform rating maintained.
• Current price$227.50The table is dated July 30, 2026.

Impact & implications

For investors, VRT's investment thesis is shifting from "high growth, high certainty, high multiple" to "demand remains strong, but execution must be revalidated." Near-term share-price recovery requires management to explain the path and timeline for resolving supply-chain issues at subsequent meetings and to deliver strong growth and product progress over the coming quarters. Over the medium to long term, AI data center power and thermal management demand, global capacity expansion, liquid cooling, and service capabilities continue to support growth; however, the valuation environment featuring peak-period multiples of 55x NTM P/E and 40x EV/NTM EBITDA may already be over.

Risks

• Efficiency improvements reduce required cooling demand.
• Data center expansion slows unexpectedly.
• A faster shift from NVIDIA chips to custom silicon weakens the advantages derived from Vertiv's existing customer and solution relationships.
• If Vertiv does not respond quickly enough, the technology path may shift from DTC or 800V DC to other solutions.
• Congestion in the prefabricated solutions supply chain may persist, affecting delivery of the heavily back-end-loaded second-half revenue guidance.

What to watch

• Management's specific solutions and timeline for addressing supply-chain issues at subsequent investor meetings.
• Whether approximately 35% organic growth in 3Q26 and implied organic growth of more than 40% in 4Q can be delivered.
• The development, testing, and customer adoption progress of 800V DC/SST products, particularly validation progress with hyperscalers.
• The pace of deferred-revenue conversion into revenue, especially order realization in 2027.
• Whether the valuation multiple stabilizes near 27x or expands again following consecutive earnings beats.