3 Stocks Riding the AI Data Center Power Buildout in July

By Joel South Published Jul 16, 8:00AM EDT

Quick Read

Eaton (ETN) grew its electrical order book 42% organically while Vertiv (VRT) built a $15 billion backlog on 252% order growth, both posting Q1 beats.
Caterpillar (CAT) beat Q1 EPS by 19% as its Power Generation segment grew 41% for four consecutive quarters, backed by a record backlog.
Data centers are projected to consume 12% of U.S. electricity by 2028, and that makes power infrastructure the first place AI earnings leverage appears, ahead of compute itself.
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3 Stocks Riding the AI Data Center Power Buildout in July — © 24/7 Wall St.

AI data center construction is a power problem before it is a compute problem, and the equipment that moves, conditions, cools and backs up electricity inside those buildings is where the earnings leverage is showing up first.

Three U.S.-listed industrials have become the cleanest ways to own that buildout: Eaton (NYSE:ETN | ETN Price Prediction) for switchgear and thermal management, Vertiv (NYSE:VRT) for critical power and cooling infrastructure and Caterpillar (NYSE:CAT) for on-site backup generation. Each posted a first-quarter beat, each raised guidance, and each is trading with a forward multiple that reflects real order acceleration rather than a story. Here is how they stack up going into the July earnings cycle.

The macro backdrop is unusually supportive. The Department of Energy projects data centers will account for up to 12% of U.S. electrical demand by 2028, and PJM Interconnection’s independent market monitor concluded that “data center load growth is the primary reason for recent and expected capacity market conditions” in the country’s largest grid region. That is the tailwind these three names are monetizing.

Eaton (ETN): The Compounding Acquirer

Eaton makes the electrical guts of a data center: switchgear, busway, power distribution and now liquid cooling after closing Boyd Thermal. Shares traded around $413.98 on July 15, up 26.48% year to date, with a market cap near $158 billion. Forward earnings sits at 30x and the analyst consensus target at $455.79, with 22 Buy or Strong Buy ratings against four Hold ratings.

Q1 delivered adjusted EPS of $2.81 versus a $2.73 consensus on revenue of $7.45 billion, up 16.8% year over year. The number to anchor on is Electrical Americas: revenue rose 20% while the twelve-month rolling order book grew 42% organically, driven by data center demand. Total Electrical backlog is up 48%. Management closed $11 billion in acquisitions in the quarter, headlined by Boyd Thermal at $9.55 billion, and raised full-year adjusted EPS guidance to $13.05 to $13.50. CEO Paulo Ruiz called out “significant capacity expansion investments to meet demand” in Electrical Americas.

Risk: integration. Net interest expense jumped to $106 million from $33 million year over year, and GAAP EPS fell to $2.22 from $2.45 on acquisition charges. A stumble on Boyd or the planned Q1 2027 Mobility spin-off would compress the multiple quickly.

Vertiv (VRT): The High-Growth Pure Play

Vertiv is the closest thing to a listed data-center-infrastructure pure play. On July 15, shares changed hands around $300.86, up more than 71% year to date and more than 136% over the past year. Forward earnings sits at 52x, with a consensus target of $377.40 and 22 Buy or Strong Buy ratings calls versus three Hold ratings.

The re-rating has fundamentals behind it. Q1 revenue grew 30.1% to $2.65 billion, adjusted EPS of $1.17 beat by 15.68%, and Americas organic sales expanded 44%. Adjusted operating margin expanded 430 basis points to 20.8%. The leading indicator is Q4 2025 orders, which grew 252% year over year, pushing backlog to $15 billion at a book-to-bill near 2.9x. Vertiv joined the S&P 500 in March 2026 after picking up investment-grade ratings in February. Full-year adjusted EPS guidance was raised to $6.30 to $6.40, implying 50% to 52% growth at the midpoint.

Risk: valuation and geography. EMEA revenue declined 20.3%, and at 52x forward earnings with a beta of 2.03, any hiccup in the AI CapEx cycle would land squarely on this multiple. Shares already slipped 3.96% in the past week.

Caterpillar (CAT): The Scale Play With a Backup Power Kicker

Caterpillar is the biggest of the three, at $438 billion in market cap, and its data center exposure runs through large reciprocating engines and turbines used for prime and backup power. Shares traded around $917.58 on July 15, up 53.34% year to date and 126.76% over the past 12 months. Forward earnings comes in at 39x, with an analyst target of $962.49 and a more mixed rating split: 15 Buy or Strong Buy ratings, 11 Hold ratings and two Sell ratings.

Q1 EPS of $5.54 topped the $4.64 consensus by 19.3% on revenue of $17.415 billion, up 22.2%. Power Generation, the product line closest to AI infrastructure, grew 41% to $2.817 billion. Momentum has been building for four straight quarters: +28% in Q2 2025, +31% in Q3, +44% in Q4, and +41% in Q1 2026. CEO Joe Creed pointed to “a record backlog” as the foundation for continued momentum. Capital returns underline the scale: $5.0 billion in buybacks and roughly $0.7 billion in dividends in the quarter, with a yield near 0.64%.

Risk: tariffs and cyclicality. Resource Industries segment profit fell 39% on tariff-driven manufacturing costs, and Caterpillar’s construction and mining exposure remains cyclical if dealer inventory builds outrun end-user demand.

Investors get three distinct expressions of the same trade here: Eaton for compounding execution and M&A optionality, Vertiv for the highest earnings growth rate at the highest multiple, and Caterpillar for scale, capital returns, and a Power Generation line that keeps re-accelerating. Second-quarter reports across the group will be the near-term catalyst worth watching.

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About the Author Joel South →

Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.

He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.