Industrial Sector Explained: Data Center Growth & Rise of Vertiv | The Real Eisman Playbook Ep. 21

About this Video

• Video Title: Industrial Sector Explained: Data Center Growth & Rise of Vertiv | The Real Eisman Playbook Ep. 21
• Channel: Steve Eisman
• Speakers: Steve Eisman, Steve Tusa
• Duration: 00:56:21

Introduction

This video discusses the industrial sector, focusing on the significant growth of data centers and its impact on related industries. The conversation centers around investment opportunities within the sector, analyzing several key companies and their prospects.

Key Takeaways

1. Data Center Growth is Massive: Data center construction is experiencing unprecedented growth, creating a ripple effect across power generation, transmission, and distribution. This is driven by economic viability, not government intervention.
2. Vertiv's Promising Position: Vertiv, a company specializing in data center power and cooling infrastructure, is projected to grow close to 20% for the next three years due to increased demand driven by the rise of AI and powerful new chips. Their pricing power has significantly increased compared to previous years.
3. Power Grid Strain and Innovation: The increased demand for electricity from data centers is straining the power grid, leading to innovation in on-site power generation, including smaller turbines and alternative energy solutions.
4. Honeywell vs. GE: Honeywell's performance is contrasted with GE's past struggles. While GE's breakup resulted in some successful segments, Honeywell's diversification and lack of a significantly depressed base hinder its potential for rapid growth, unlike GE's aviation segment which benefited from a low base after the COVID-19 pandemic.
5. 3M's Turnaround Potential: 3M is presented as a turnaround story with potential for margin improvement and growth, despite past challenges related to operational inefficiencies and liabilities.