As we’ve all become aware, volatility has swept the markets over recent weeks, with tariff talks and other economic data causing a risk-off environment.
Many stocks, including those involved in the Data Center side of the AI frenzy – Vertiv VRT, Super Micro Computer SMCI, and Arista Networks ANET – have faced pressure, with shares well off 2025 highs.
But is it a buying opportunity? Let’s take a closer look at the current standing of each.
Vertiv Raises Sales Outlook
Concerning headline figures in Vertiv’s latest release, it exceeded both consensus EPS and sales expectations, with EPS soaring 77% on the back of a 26% move higher in sales. The growth rates here are quite significant, reflective of healthy underlying demand.
Below is a chart illustrating the company’s sales on a quarterly basis.
Image Source: Zacks Investment Research
Importantly, Vertiv upped its full-year 2025 sales guidance into a band of $9.1 - $9.3 billion, with the midpoint reflecting roughly 16% year-over-year growth. Vertiv also reaffirmed its five-year financial outlook, citing growing AI adoption as a key driver of data generation and data center demand. The company overall remains to benefit in a big way from providing the critical infrastructure needed to support the expansion.
Valuation isn’t rich, with the current 0.8X PEG ratio indicative of both growth and value. The current forward 12-month earnings multiple works out to 22.7X, nearly half of 2025 highs of 43.9X.
Image Source: Zacks Investment Research
ANET Unlocks Higher Profits
Analysts have continued to be bullish on ANET’s EPS outlook over recent months, with the stock holding a favorable Zacks Rank #2 (Buy). Strong quarterly results that have revealed snowballing demand have been a big tailwind for the stock amid the AI frenzy.
Image Source: Zacks Investment Research
Below is a chart illustrating ANET’s sales on a quarterly basis, with the AI boost easily noticeable over the most recent periods. The strong top line growth looks set to continue nicely, with current year expectations alluding to 18% YoY growth.
The stock sports a Style Score of ‘A’ for Growth.
Image Source: Zacks Investment Research
In addition, the company’s margin performance has been positive over recent quarters, providing a nice profit boost overall. ANET’s Data Center products are likely higher-margin by nature, helping partly explain the positive change.
Image Source: Zacks Investment Research
SMCI Outlook Remains Cloudy
The most volatile of the bunch, SMCI shares have been hit hard from their rich 2024 high, down 66% since. A short report took a lot of wind out of its sail last year, but it’s critical to note that the company cleared the allegations after a period of uncertainty.
Image Source: Zacks Investment Research
Quarterly results haven’t been enough to shake the stock out of its slump, with the company’s current negative EPS outlook warranting a level of concern. SMCI is currently a Zacks Rank #4 (Sell) due to the cloudy earnings picture.
Image Source: Zacks Investment Research
The company is still forecasted to see 15% EPS growth on 59% higher sales in its current fiscal year, undoubtedly impressive, but the growth rates have consistently suffered from downward revisions from analysts over recent months.
Bottom Line
Data Center stocks have been hit hard in the market’s recent wave of volatility, perhaps bringing about nice buying opportunities for those looking to join the trade.
All three stocks above – Vertiv VRT, Arista Networks ANET, and Super Micro Computer SMCI – are prime considerations for Data Center exposure, though investors should be patient with SMCI until its earnings outlook shifts positively.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpSuper Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
Vertiv Holdings Co. (VRT) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
%20Pre-Market%20%7C%20Nasdaq&_biz_n=6&rnd=466815&cdn_o=a&_biz_z=1742525579554)
%20Real-Time%20Quotes%20%7C%20Nasdaq&_biz_n=7&rnd=807431&cdn_o=a&_biz_z=1742525579695)
%20Earnings%20Report%20Date%20%7C%20Nasdaq&_biz_n=8&rnd=458364&cdn_o=a&_biz_z=1742525579695)
