Key Takeaways
- Vertiv fell another 16% today, after Wednesday’s 13% drop, on fears that Democrats’ midterm wins will slow data center construction.
- The fear reaches Vistra too.
- A Texas freeze hits Vistra hardest, since its plants can’t move, while Vertiv’s gear can follow a project elsewhere.
- Hyperscalers’ next capex guidance will show whether data center money is being cut or just moved.
Vertiv (VRT) sank another 16% this morning, after Wednesday’s 13% drop. CNBC Halftime Report regular Steve Weiss explained the selloff on Wednesday: “The market is seeing the Democratic victory as forced control on CapEx.”
Texas is the worry. Governor-elect Gina Hinojosa won after promising a moratorium on data center construction, and Weiss said companies won’t be able to spend what they committed, “particularly in Texas where 30% of all projects are.” That puts Vistra (VST) in the line of fire, along with the power suppliers whose orders depend on the same buildout.
Vistra is stuck in Texas
On Wednesday, Vistra fell 14%, while Nvidia slipped 3% and Broadcom 2%. A project blocked in Texas can move to another state and still buy the same chips.
Vistra’s power plants can’t move. It had hedged about 94% of its expected 2027 output but only about 72% of 2028’s as of Aug. 3, so a slower Texas build would hurt it most from 2028. It reports on Friday.
GE Vernova (GEV) is better protected. It booked $29.3 billion of orders in the third quarter and ended it with a $197 billion backlog.
Chips are sliding today, too. Applied Materials (AMAT) is down 11%, with Qualcomm’s weak guidance and Arm’s royalty miss adding pressure.
TIKR tracks 30 analysts on Vertiv. How many say “Buy”?
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Vertiv’s gear can go anywhere
Vertiv has more in common with Nvidia than with Vistra here. A data center that can’t go up in Texas still needs power and cooling wherever it gets built, and developers are still signing: Bloom Energy announced a 900 MW deal with NTT DATA this morning.
And Vertiv went into the vote with plenty of demand. On Oct. 28, it reported organic orders more than doubled and raised its full-year guidance. Analysts expect normalized EPS to triple from 2025 to 2028:
Those estimates only fall if hyperscalers spend less in total, and investors dumping Applied Materials today seem to be weighing that.
Before today, Vertiv traded at 24x forward earnings, below its five-year average of 27x and far from May’s 55x peak:
At today’s price, it’s about 22x.
The way I see it, the market is pricing Vertiv like Vistra, and the drop looks overdone. Of course, Hinojosa hasn’t taken office yet, and the next round of hyperscaler capex guidance will show whether the money is moving or shrinking.
So what is Vertiv stock actually worth?
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