There’s more upside ahead for this AI derivative play, according to the charts
The AI trade is powering ahead as the markets are seeing a rotation back into the semiconductor, hardware and software companies that are driving the revolution. One industrial company on my radar — that I don’t yet have a position in — is Vertiv (VRT) . The company provides liquid cooling systems for data centers powering AI. Liquid cooling is a technology that will continue to gain momentum with the large data centers operated by the ‘hyperscalers’ along with the co-location market, which involves renting server space to smaller companies. You can read a bigger explanation of how liquid cooling works and the other companies involved here . In the last three quarters, VRT reported quarter-over-quarter EPS growth of 46%, 79% and 100%, respectively. In those same quarters, the ESP beat consensus expectations by 17%, 20%, and 5%, respectively. Looking at the weekly chart you can easily see the massive run this company has seen form the 2022 lows. Technically speaking, I see additional upside possible (likely?) targeting the confluence of Fibonacci projection levels ranging from $127 to $171. I know it’s a wide zone, but consider the percentage gain this stock has experienced in the past 2 years. I do not yet have a position in this stock and want to use any pullback from a test of the all-time highs to build a position in the growth portfolio at Inside Edge Capital. Turning to the daily chart we see the stock is pulling back from the all-time highs with an anticipated support zone of $103-$95. I plan to begin building a position buying approximately one-third of my intended position size on a pullback to $105, and then add another one-third into the $100 zone and then add as/if we break new highs. -Todd Gordon, Founder of Inside Edge Capital , LLC DISCLOSURES: (Gordon does not own VRT personally or in his wealth management company Inside Edge Capital at the time of publication, but that may change. Charts shown are MotiveWave.) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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