Vertiv

Revenue jumped 30 percent last quarter to 2.65 billion dollars, and management expects around 13.5 to 14 billion dollars for the full year. The four biggest cloud companies are on track to spend more than 700 billion dollars building data centers this year, up from about 410 billion, and Vertiv sells the power and cooling equipment they all need.

As Vertiv gets bigger, more of each sale drops to the bottom line. Adjusted operating margin hit almost 21 percent last quarter, roughly triple where it sat a few years ago, and free cash flow more than doubled to 653 million dollars. Net debt is now tiny at about 0.2 times earnings, leaving plenty of room to keep investing.

The stock is expensive, trading around 47 times next year's expected earnings, far above a typical industrial company. A lot of future growth is already baked into the price, so even a strong quarter that falls short of very high expectations could send the shares lower.

Vertiv's fortunes are tied to how much big tech spends on data centers, and that spending moves in cycles. If power and water bottlenecks delay projects, or if AI spending slows, orders and revenue could stall. Some of its recent cash flow also comes from customer prepayments, which can reverse if demand softens.