Technology

Report by Abacus Research

The shift towards 800 VDC data centre architectures creates a major new opportunity for SolarEdge and Enphase, whose distributed solar engineering expertise positions them well to handle the hyper-fast, chaotic load swings created by AI infrastructure. Both companies are repurposing existing R&D and already have products in testing, with Abacus arguing their architectures could compete effectively against traditional industrial incumbents such as Eaton and Vertiv. Abacus estimates the emerging market opportunity could reach ~$5-6bn by 2031 and believes successful adoption of 800 VDC systems could ultimately double earnings for both companies. Navitas is also highlighted since it provides the chips needed to make solid-state transformers work for companies such as VRT, ETN and ENPH; no matter whose product wins, NVTS benefits.

Industrials

Report by Hedgeye

Given his recent supply chain checks and conversations with industry players, Felix Wang believes the company’s liquid cooling backlog and revenue expectations are too high. While supply bottlenecks are improving, he is particularly worried about some of the new liquid cooling technology out there. As a result, VRT's price-cost tailwinds of >$65m for FY24 may become harder to achieve. Felix also argues VRT's relationship with Nvidia is not really a game-changer and tracking new data centre construction he notes the pace has slowed in 2Q24. The stock looks very expensive at 34x FY25 P/E and 23x EV/EBITDA. While the long-term picture of liquid cooling is constructive for data centres, there is uncertainty on when / how it will play out. 35% downside.