From Chips to Power Grids: The Hidden Plays Behind the AI Gold Rush

The article highlights Amkor Technology and Vertiv Holdings as critical enablers of the AI infrastructure buildout, beyond core chip manufacturing. Amkor, a leading outsourced semiconductor assembly and test (OSAT) provider, is central to advanced packaging for AI chips, reporting Q2 FY25 revenue of $1.5 billion and poised for growth in the expanding advanced packaging market, particularly with its high-density fan-out solutions. Vertiv, a key player in power and thermal management for AI data centers, demonstrated robust Q2 sales growth of 35% to $2.6 billion and an $8.5 billion backlog, driven by surging demand for its liquid-cooling and integrated infrastructure, justifying its premium valuation as it expands capabilities through acquisitions and strategic partnerships.

Analysis

The accelerating demand for AI compute capacity is driving significant growth in supporting infrastructure beyond core chip manufacturing, benefiting specialized players like Amkor Technology and Vertiv Holdings. Amkor, a leading outsourced semiconductor assembly and test (OSAT) provider, reported Q2 FY25 revenue of $1.5 billion, up 3% year-over-year, with EPS at $0.22. Despite a temporary 12% gross margin due to new facility ramp-up costs, the company is well-positioned in the advanced packaging market, projected to grow from $48.5 billion in 2023 to $119.4 billion by 2032, with its HDFO product already in high-volume production for a lead customer. The company maintains financial flexibility with $2 billion in cash and a 1.5x debt-to-EBITDA ratio, trading at a reasonable 20 times forward earnings.

Vertiv Holdings, a critical provider of power and thermal management for AI data centers, demonstrated robust Q2 net sales growth of 35% year-over-year to over $2.6 billion, supported by a soaring 21% backlog to $8.5 billion, indicating strong revenue visibility for 2025. The company's liquid-cooling capacity has scaled over 40 times since 2024, driven by hyperscaler demand, and it guides for $10 billion in net sales and $3.80 adjusted diluted EPS this year. Strategic acquisitions, such as Great Lakes and Waylay NV, have enhanced its integrated data center solutions and AI-powered monitoring capabilities.

Vertiv's strong financial position, with $2.5 billion in liquidity and a low 0.6x net leverage, supports future growth initiatives. While trading at a premium 33.4 times forward earnings, this valuation appears justified by the substantial demand for its essential solutions in the global AI infrastructure buildout and its strategic collaborations, including with Dell and CoreWeave for Nvidia's Blackwell architecture.

Key Decisions for Investors

• Consider Amkor Technology for exposure to the critical and rapidly expanding advanced packaging segment of the AI supply chain, noting its reasonable valuation and strategic positioning despite temporary margin pressures.
• Evaluate Vertiv Holdings for its strong financial performance, significant backlog, and essential role in AI data center power and thermal management, acknowledging its premium valuation is supported by robust demand and strategic growth initiatives.
• Monitor the continued growth in hyperscaler AI infrastructure investments and the advanced packaging market expansion as key drivers for both companies' long-term performance.