Watch This Nvidia Partner as Investors Await More Tariff Deals
I've got my eyes on an AI-related darling as volatility creates some trade opportunities in the market.
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The Fed kept interest rates unchanged on Wednesday. While the non-action was completely expected, it is never encouraging to hear the Fed essentially say that its hands are tied at the moment.
So, like the Fed, we play the waiting game — the game of waiting on more data, more changes in economic policies and more responses and/or negotiations from countries around the world to tariffs, even after the U.S. announced a deal with the United Kingdom.
Fortunately, trade opportunities are still abound in the market, and I’m seeing the volatility that creates trades but doesn’t push me into the territory of fear. One stock that recently caught my eye is Vertiv Holdings VRT.
VRT was an AI-related darling last year. Shares roughly tripled over 13 months, hitting their highs this past January. Since then, Vertiv has fallen 33%, and that’s after the stock has nearly doubled from its April low.
Two weeks ago, Vertiv delivered a strong first-quarter performance. The company reported revenue of $2.04 billion, a 24% increase year over year. More impressively, Vertiv’s backlog grew 25% to $7.9 billion.
Adjusted earnings per share were $0.64, a 49% year-over-year gain, and operating margins expanded by 130 basis points. Management increased full-year revenue guidance by $250 million. A partnership with Nvidia NVDA and a major AI data center project in Europe may help keep the market’s attention on Vertiv until their next report.
The market reacted strongly to the April 23 report. After the initial surge, Vertiv consolidated over a week’s trading before another gap higher. Once again, the stock is trading sideways, consolidating, offering another breakout setup.
The current pattern has Vertiv trading against March highs. A breakout above $100 brings momentum and breakout traders back into the stock with an eye on the open gap from January.
While a fill of the gap, or even a test of the lower end of the gap, feels out of reach, a breakout from the current channel has me eyeing a push to $120. A close below $88 will help the bears regain control, but I like the setup and will be watching to buy a close over $98.
At the time of publication, Byrne had no positions in any securities mentioned.
