Investors should prioritize companies that deliver advanced packaging and power management solutions tailored for AI data centers.
Artificial intelligence (AI) has evolved beyond a mere technological trend. It is fundamentally changing the way we live, work, learn, and interact, significantly reshaping our environment and lifestyle.
However, the training and operation of sophisticated AI models that catalyze this transformation demand a substantial amount of compute power and data bandwidth. Consequently, the need for cutting-edge chips, servers, networking equipment, and power systems essential for constructing expansive data center capacity has surged dramatically.
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Nvidia‘s graphics processing units (GPUs) are extensively utilized to facilitate accelerated computing within AI data centers. Meanwhile, Broadcom enhances communication among these chips with its bespoke networking and connectivity solutions. However, the realm of AI extends beyond semiconductors; it also relies heavily on dependable chip packaging and power management systems that ensure the efficient and reliable operation of these high-performance servers.
Here, we will explore two noteworthy but less recognized companies that are significantly contributing to the gold rush in the realms of chips and power grids.
Discovering Amkor Technology’s Key Role in Semiconductor Packaging
Amkor Technology‘s (AMKR -7.87%) advanced packaging and testing solutions are pivotal in the semiconductor manufacturing ecosystem. The firm ranks as the second-largest outsourced semiconductor assembly and test (OSAT) entity worldwide. It specializes in assembling, packaging, and validating GPUs, application-specific integrated circuits (ASICs), and high-bandwidth memory (HBM) chips, all of which are crucial for accelerated computing platforms. These services guarantee the performance and reliability of AI and high-performance computing chips.
In the second quarter of fiscal 2025, Amkor reported a 3% year-over-year increase in revenue, amounting to $1.5 billion, with earnings per share (EPS) reaching $0.22. However, the company’s gross margin stood at a modest 12%, primarily due to increased preparatory costs for upcoming product launches and challenges associated with the initial scaling of its high-volume manufacturing facility in Vietnam. These margin pressures are, nonetheless, anticipated to be temporary.
While Amkor’s financial growth may not exhibit explosive characteristics, there are numerous compelling reasons to keep a close watch on this company. The global advanced packaging market is projected to escalate from $48.5 billion in 2023 to a striking $119.4 billion by 2032. This estimate seems conservative, especially considering the overwhelming demand for AI chips in data centers across the globe.
Amkor is relentlessly reinforcing its position in advanced packaging technologies. The company provides innovative packaging solutions, such as 2.5D and High-Density Fan-Out (HDFO), which enable the efficient integration of high-bandwidth memory (HBM) into next-generation computing chips. Its next-generation HDFO product has already commenced high-volume production for a leading customer.
The HDFO technology minimizes signal loss and facilitates high-bandwidth communication among densely integrated, AI-optimized chips. Amkor’s advanced packaging and testing facilities in South Korea and Taiwan are operating at high utilization levels, and the company intends to further expand its capacity at these sites.
As of the end of the second quarter, Amkor reported $2 billion in cash and a total liquidity of $3.1 billion, while its total debt stood at $1.6 billion. With a debt-to-EBITDA ratio of approximately 1.5, Amkor maintains sufficient financial flexibility to invest in future growth initiatives.
Currently trading at nearly 20 times forward earnings, Amkor presents a compelling investment opportunity. Given its substantial exposure to the growing demand for AI-driven packaging and testing solutions, the company appears to be a sound choice for investors at this time.
Exploring Vertiv Holdings’ Impact on AI Infrastructure
Vertiv Holdings (VRT 0.13%) has established itself as a major player in the AI infrastructure landscape. The company delivers crucial power and thermal management infrastructure essential for operating AI data centers efficiently at scale.
Vertiv’s liquid-cooling franchise has significantly increased its capacity, scaling over 40 times since 2024, driven by surging demand from hyperscalers seeking high-density server racks that can handle larger power requirements. By effectively dissipating the intense heat generated by these high-power AI servers, liquid-cooling systems not only enhance energy efficiency but also mitigate performance degradation caused by overheating.
Vertiv’s financial results have been remarkable. The company’s net sales surged by 35% year-over-year, exceeding $2.6 billion in the second quarter. Furthermore, its backlog soared by 21%, reaching $8.5 billion. This impressive performance underscores the company’s robust revenue visibility for 2025. Currently, Vertiv anticipates net sales of $10 billion and adjusted diluted earnings per share (EPS) guidance of $3.80 for this fiscal year. Additionally, management is targeting an adjusted operating margin of 20% for 2025, with aspirations to reach 25% by 2029.
Vertiv is increasingly bridging the gap between power and thermal systems (often referred to as gray space) and IT hardware and racks (known as white space) within data centers. The recent acquisition of Great Lakes has enriched Vertiv’s portfolio, adding data rack enclosures, custom racks, and enhanced cable management solutions. This strategic move has further solidified Vertiv’s ability to integrate white space and gray space effectively in data center environments.
Moreover, the company has enhanced its capabilities for AI-driven monitoring and control of its power and cooling systems through the acquisition of Waylay NV. As a result, Vertiv is exceptionally positioned to offer fully integrated and prefabricated systems to hyperscalers, facilitating the rapid expansion of data center capacity.
Vertiv has established collaborations with CoreWeave and Dell Technologies to deploy Nvidia’s latest Blackwell architecture-based GB300 NVL72 system. Additionally, its partnership with Oklo is set to provide data centers access to advanced nuclear power plants. This innovative nuclear power technology can assist data centers in managing their long-term energy requirements economically. All these factors underscore Vertiv’s leading role in the advancement of AI infrastructure.
Looking ahead, Vertiv anticipates generating adjusted free cash flow of $1.4 billion in fiscal 2025. With $2.5 billion in liquidity and a net leverage ratio (total debt to earnings) of only 0.6x, the company possesses ample flexibility to support future growth initiatives, both organically and through acquisitions.
While trading at nearly 33.4 times forward earnings, Vertiv shares carry a premium valuation. However, this premium is justified by the strong demand for its power and thermal management solutions in the global AI expansion. Thus, investing in this stock could be a wise decision at present.
