When investors look for the top performers of the AI boom, Nvidia is the obvious answer. However, an 80-year-old air conditioning company, Vertiv, has staged a remarkable ascent, with its market cap exploding from under $11 billion to $109 billion since early 2021.

The Dave Cote Strategy

The architect of this transformation is Dave Cote, the retired industrialist who previously engineered the revival of Honeywell. Cote, known for his unconventional style—a hip-hop enthusiast and Harley-Davidson rider—spotted an opportunity in Vertiv that its former owners, Emerson Electric, had dismissed as a "horrible business." Through a deal with Goldman Sachs and the use of a SPAC, Cote acquired Vertiv for $4 billion in 2020.

His primary move was repositioning the company. While Vertiv traditionally focused on major banks, Cote pivoted toward hyperscalers like Google and Microsoft. He anticipated that data generation would outpace data center capacity, creating a massive tailwind for infrastructure providers.

From Air to Liquid: The Technological Shift

The critical turning point came with the adoption of liquid direct-to-chip (DTC) cooling technology. As Nvidia's GPUs become increasingly powerful, traditional air cooling is no longer sufficient. Vertiv, through collaboration and the subsequent 2023 acquisition of British startup CoolTera, developed a system where a water and glycolic compound absorbs heat directly from the semiconductors.

  • DTC technology reduces the required data center footprint by 50% to 70%.
  • Vertiv collaborated closely with Nvidia to understand the cooling needs of next-generation chips.
  • The company aims to triple its production capacity again by 2029.

Culture and Manufacturing

Beyond technology, Cote and current CEO Giordano Albertazzi implemented a "thinking company" culture based on kaizen (continuous improvement) principles. They encourage shop-floor employees to voice concerns and suggest improvements, believing that the best ideas come from those performing the tasks rather than executive offices.