Vertiv Holdings (VRT) is sinking 6.5% after the company provided lower-than-expected earnings per share guidance for the current quarter. But the firm's fourth-quarter financial results came in meaningfully above analysts' average estimates.

The company markets power and cooling systems for data centers.

A Look at VRT's Guidance and Results

For Q1, VRT expects EPS, excluding some items, of 57 cents to 63 cents. Analysts on average had expected the company to generate Q1 adjusted EPS of 64 cents.

However, for Q4, the firm reported adjusted EPS of 99 cents, well above the mean outlook of 82 cents and representing a 77% surge versus Q4 of 2023. Further, its Q4 sales jumped 26% compared with the same period a year earlier to $2.35 billion, which was $190 million above analysts' average estimate heading into the results.

VRT's Comments

"As technology advances to unlock the full potential of AI applications, it becomes more broadly accessible to everyone. With that accessibility comes a broader, more pervasive use of AI technology which we believe would generate more data and therefore require more data centers. As a result, I am confident in the growth trajectory of Vertiv," said CEO Giordano Albertazzi in a statement.

While we acknowledge the potential of VRT, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VRT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.