Vertiv doubles Italy chiller output on surging AI data center demand

Vertiv is doubling chiller output at its Italian campus, betting AI's thermal demands will keep outpacing data center cooling supply.

Vertiv Holdings Co. is doubling chiller production capacity at its Tognana, Italy, campus by the end of 2026, the latest sign that AI's heat density is forcing data center infrastructure to scale faster than suppliers can build. The campus near Padua serves as one of Vertiv's principal centers for cooling technology development, integrating research and development, product management, manufacturing, testing, and customer engagement.

"AI is driving thermal demands that didn't exist two years ago, with higher densities, faster deployment demands, and no room to compromise on reliability," Gio Albertazzi, chief executive officer of Vertiv, said. "This investment reinforces our position at the front of the curve."

The company plans to complete a new large-scale testing laboratory in early 2027 that will validate integration of liquid cooling systems under high-density loads and extreme temperature ranges. The facility will enable customers to test thermal performance under expected site conditions before deployment. Vertiv's backlog reached roughly $15 billion at the end of fiscal 2025, reflecting sustained demand from hyperscale customers including Microsoft Corp. and Amazon.com Inc. for AI-optimized power and cooling solutions.

Vertiv shares trade at about 75 times earnings, more than double the electrical industry average of 38 times, reflecting the premium investors assign to its AI infrastructure exposure. A discounted cash flow analysis by Simply Wall St estimates an intrinsic value of about $353 per share, implying a 13.8% discount to the current price — though the stock's high multiple leaves little room for execution missteps. The stock has returned roughly 10.5 times over the past three years, putting pressure on new buyers to justify paying up after such a strong run.

Liquid Cooling Becomes the Competitive Frontier

Vertiv believes one-third of the total addressable market for data center cooling will eventually use liquid solutions, which remove heat from high-powered chipsets more efficiently than traditional air systems. The Tognana campus expansion specifically targets this shift, with the new testing lab designed to validate integration of liquid cooling with large-scale chillers under real-world conditions.

The company's fiscal 2025 revenue grew 28% to about $10.2 billion, while net income more than doubled to $1.3 billion from roughly $496 million a year earlier. Free cash flow reached nearly $1.9 billion, providing capital to reinvest in next-generation cooling technologies. The recent completion of the ThermoKey acquisition broadens Vertiv's data center cooling footprint in Europe, the Middle East and Africa, adding to the company's thermal management capabilities.

Rival nVent Electric, which also targets AI liquid cooling, reported $3.9 billion in revenue for fiscal 2025 and a backlog of about $2.6 billion — a contrast that highlights Vertiv's scale advantage in hyperscale infrastructure. nVent counts Nvidia Corp. among its customers, with close to one-third of its sales last year tied to AI data centers. Both companies hold pole positions in liquid cooling, but Vertiv's broader product portfolio and larger backlog give it an edge in winning hyperscale contracts.

Valuation and the AI Infrastructure Bet

The expansion comes as investors debate whether Vertiv's growth can justify its premium valuation. The stock screens as undervalued on a discounted cash flow basis by 13.8%, yet its earnings multiples lean expensive, with broader checks rating it as undervalued in only two of six valuation tests. The tension reflects strong expectations embedded in the current multiple after a very large three-year move, versus a cash flow model that assumes those expectations are met through sustained cash generation.

For investors, the Tognana expansion confirms that Vertiv's growth thesis remains intact: hyperscale and neocloud providers are still in the early stages of building out AI-ready data center capacity. Vertiv's debt-to-equity ratio of about 0.9 times and nearly $1.9 billion in free cash flow give it financial flexibility to fund further expansions. However, any setbacks integrating acquisitions or weaker performance in regions such as EMEA could weigh on how much investors are willing to pay for that growth.

This article is for informational purposes only and does not constitute investment advice.