What Happened?
Shares of data center products and services company Vertiv (NYSE: VRT) fell 6.2% in the afternoon session after Microsoft announced it had successfully tested a new microfluidic cooling system for data center chips, posing a potential competitive threat.
The new technology brought liquid coolant directly inside silicon chips through tiny etched channels, removing heat up to three times more efficiently than advanced cooling methods currently in use.
As a major provider of thermal management solutions for the expanding AI infrastructure market, Vertiv's stock came under pressure because Microsoft's technology could disrupt the market if it gained widespread adoption. Microsoft also said it would work with partners to bring the microfluidics into production across its data centers. The market reaction mirrored a similar event from a few months prior when Vertiv shares also sold off after Amazon revealed its own custom liquid cooling system.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Vertiv? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Vertiv’s shares are extremely volatile and have had 41 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 3.4% as investors scooped up equities, shaking off the initial concerns inferred from the Fed's dot plot, with tech stocks leading the charge.
As a reminder, the Federal Reserve cut its benchmark interest rate by 25 basis points yesterday and signaled that more reductions could come before year-end and beyond. Initially when the cut was announced and Fed Chair Powell held his press conference, there was a pullback in the market as the Fed's "dot plot" revealed that only one cut was likely for 2026. This was below the three cuts that had been priced into the markets. This was the first interest rate cut of 2025, a move investors had widely anticipated. In response to the decision, stocks rose significantly, positioning major indexes like the S&P 500 and Nasdaq to open at record levels.
The Fed's decision was influenced by signs of a weakening labor market. Lower interest rates are generally seen as positive for stocks because they reduce borrowing costs for businesses and make fixed-income investments like bonds less attractive by comparison, driving capital into the equity market. While Fed Chair Powell noted the path forward has risks, the prospect of looser monetary policy has fueled optimism on Wall Street.
Vertiv is up 20.1% since the beginning of the year, and at $142.18 per share, it is trading close to its 52-week high of $153.49 from January 2025. Investors who bought $1,000 worth of Vertiv’s shares 5 years ago would now be looking at an investment worth $8,496.
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