The Smartest Data Center/AI Stocks to Buy With $2,000 Right Now

Lee Samaha, The Motley Fool

Sat, May 10, 2025, 5:32 PM 5 min read

• These two hidden stocks play the AI/data center theme.

• This data center equipment company and Nvidia partner provides critical solutions.

• This company is aggressively increasing its power utilities and data center exposure.

• 10 stocks we like better than Vertiv ›

Suppose you think of investing a relatively small amount of money in stocks in a diversified portfolio and are looking to spread risk while gaining upside exposure to an exciting growth theme. In that case, the AI/data center space is a good place to start. Vertiv (NYSE: VRT) and nVent (NYSE: NVT) may not spring to mind when thinking about how to profit from the booming demand for artificial intelligence (AI) applications and, in turn, data center spending. However, that observation highlights an opportunity for discerning investors to profit. All three provide crucial solutions and services to data centers and represent hidden ways to play the theme.

Vertiv provides digital infrastructure for data centers and communication networks, and its products include power management, switchgear, thermal management, and monitoring and control infrastructure. Emerson Electric sold the company to Tom Gores' private equity company, Platinum Equity, in 2016, which then brought the company to the market in 2020. Its executive chairman is former long-term CEO of Honeywell, David Cote.

The company has found itself ideally placed to benefit from the rising interest in data center investment to support application growth, as amply demonstrated by Vertiv's booming backlog growth. That growth continued through the first quarter, with backlog up 10% from the end of 2024.

The strength in its orders and backlog growth encouraged management to raise the midpoint of its full-year organic revenue growth forecast to 18% from a prior estimate of 16% on its recent Q1 earnings call.

However, management maintained the midpoint of its profit margin, profit, and cash flow guidance due to uncertainty over tariffs. Still, Vertiv's management and Wall Street analysts expect $1.3 billion in free cash flow (FCF) in 2025, and Wall Street expects $1.65 billion and $1.79 billion in FCF in 2026 and 2027.

With a current market cap of $36.1 billion, Vertiv would trade on 28 times and 22.5 times FCF in 2025 and 2026. That's not outstandingly cheap, but it will look like a good value if the trend toward accelerating AI/data center demand continues.

nVent offers electrical connection and protection solutions to various industrial, commercial, and residential customers. Those end markets include data centers and the power utilities that generate the energy to power them. Management has made a conscious decision to increase the company's exposure to these attractive end markets by divesting its thermal management business in January, and then completing the purchase of the electrical products group business of Avail Infrastructure Solutions for $975 million.