When David Cote left the top job at Honeywell, few would have guessed his next act would turn an old air conditioning company into one of the best performing stocks in the S and P 500. Cote became chief executive of Vertiv, a cooling and power equipment maker founded in 1946, in 2020, and the company's market value has since grown from roughly 11 billion dollars in 2021 to about 109 billion dollars today.
That growth has produced an annualized return of about 50.5 percent, which ranks third among S and P 500 companies over that stretch, behind only Comfort Systems and Nvidia. It is a striking result for a business that spent decades serving fairly conventional customers such as banks, and whose operating margins once sat around 8 to 9 percent before climbing toward a new target range of 25 to 30 percent.
The shift traces back to a bet on where computing demand was headed. Vertiv moved its focus toward hyperscale cloud companies such as Google and Microsoft, whose data centers generate far more heat than traditional server rooms as they pack in the processors that power artificial intelligence workloads. To serve them, Vertiv leaned into liquid direct to chip cooling technology, strengthened in December 2023 through its acquisition of CoolTera, which circulates fluid directly across a chip's surface to pull heat away more efficiently than blowing cold air through a room.
That approach can cut the physical footprint a data center needs for cooling by 50 to 70 percent while keeping processors in the 65 to 75 degree range they need to run reliably. Giordano Albertazzi, a mechanical engineer who became Vertiv's chief executive in January 2023 after Cote moved into an executive chairman role, has overseen a rapid buildout of manufacturing capacity to keep pace with orders, including a 215,000 square foot plant that opened in South Carolina in October 2024 as part of a plan to triple production by 2029.
Vertiv's rise mirrors a broader boom in the data center cooling market, which analysts estimate is worth more than 30 billion dollars today and could reach 128 billion dollars by 2033 as demand keeps growing at roughly 22 percent a year. Vertiv is widely seen as holding the largest share of both the direct to chip segment and the cooling market overall, a position Goldman Sachs highlighted when it singled the company out from more than a thousand it reviewed as a standout on performance.