MOD vs. VRT: Which Stock Is the Better AI Data Center Play?

While both companies are set to benefit from the AI-driven data center infrastructure boom, their positioning differs. Vertiv brings scale and integrated infrastructure capabilities, while Modine is sharpening its focus on thermal management solutions for data centers. Though smaller in scale, Modine is building a fast-growing cooling business that could reshape its growth trajectory in the coming years.

On a year-to-date basis, both stocks have performed well. Vertiv has gained 66% and Modine shares are up 51%.

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Still, one stock offers considerably stronger exposure to the AI data center space. Let's dive deeper into both stocks.

The Case for Modine

Modine's data center segment sales grew 90% year over year in the last reported quarter. This was the third straight quarter of record order intake, and backlog has nearly doubled over the past year, reflecting real, multi-year demand.That visibility is backed by contracts. Modine has locked in over $4 billion in Airedale chiller commitments running from calendar 2027 through 2029, with initial orders already flowing. Management reaffirmed guidance for 60-80% data center sales growth for fiscal 2027, segment earnings growth above 85%, and 50-70% organic growth in fiscal 2028.

The product pipeline supports that outlook. Modine's new 3-megawatt chiller packs 50% more cooling capacity into just a 9% larger footprint, and it's gaining traction across hyperscale, Neocloud and colocation customers. Deeper co-development with these customers also raises switching costs, which helps lock in future business.

That said, this growth is still concentrated in a handful of relationships. Management pointed to just three customers— two hyperscalers and one large Neocloud provider— as the primary drivers behind the recent surge in orders and backlog. That's a lot of near-term revenues riding on a small number of accounts, a sharper concentration risk than Vertiv's more diversified customer base.

Another key problem is margins. Component shortages hurt production and labor efficiency in the first quarter of 2027. Adjusted EBITDA margin for the segment fell to 14.8% from 22.1% a year earlier. Management attributes 450-550 basis points of that drop to excess labor and under-absorbed overhead from the supply disruption.

Modine is guiding a fast rebound— segment margin back to 19-20% by the second quarter. That’s a steep climb in a short window, and it leans heavily on supply normalizing on schedule. Pricing actions, surcharges and other commercial levers should help over time, but they do not fix cost pressure immediately, and any further commodity inflation or slow customer reimbursement could push the recovery timeline out further.Management itself has called the coming production ramp and capacity rollout a "heavy lift," as the company juggles component shortages and new manufacturing line activation.

Reflecting the execution risks, the Zacks Consensus Estimate for MOD's EPS has been revised downward recently.

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The Case for Vertiv

Vertiv's business is built entirely around what AI data centers need most— power and thermal management— unlike Modine, where data centers are just one (though fastest-growing) piece of a broader industrial portfolio.

Second-quarter 2026 net sales rose 24% year over year to $3.27 billion, driven by broad-based demand as hyperscalers, enterprise customers and colocation providers all ramped up infrastructure spending to keep pace with AI deployments. Rising rack density and faster build cycles are pushing customers toward the kind of advanced power and cooling systems Vertiv specializes in, and a strong sales pipeline with accelerating deal cycles has kept converting that demand into revenues.

Profitability moved in the right direction too. Adjusted operating margin came in at 22.6% in the second quarter, up 410 basis points year over year. Management guided 24-25% margin in the third quarter on the back of organic growth, operating leverage and further productivity improvements.

Vertiv has been expanding manufacturing capacity aggressively and globally. The company added new capacity in Malaysia, expanded five large plants across the Americas, and increased chiller production in EMEA. That footprint lets Vertiv deliver complex, large-scale infrastructure solutions.

Last month, Vertiv announced an expansion at its Tognana campus near Padua, Italy, for scaling up manufacturing and testing for AI-ready cooling systems. The project is set to double regional chiller production capacity by the end of 2026, with a large-scale testing lab coming in early 2027 to validate chillers working alongside liquid cooling systems under high-density AI workloads. The company is also working with NVIDIA and Foxconn's VisionBay AI on Taiwan AI data center deployments, including power, thermal and services for NVIDIA GB300 systems.

Together, the sales growth and capacity buildout point to more room to run. Vertiv guided third-quarter net sales of $3.65 billion to $3.85 billion, suggesting the momentum from the AI data center buildout isn't slowing down anytime soon.

Analysts seem to be growing more bullish on the stock, as reflected in rising consensus EPS estimates.

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Vertiv Has the Edge

Modine's growth story is real, but it's still finding its footing at scale. Data center margins fell this quarter, and the promised rebound hinges on supply chains cooperating on a tight timeline. That's a lot of execution risk riding on one segment of a diversified business. MOD currently carries a Zacks Rank #3 (Hold).

Vertiv doesn't have that problem. It's already the scaled, pure-play leader in AI data center infrastructure. It has been expanding margins while growing revenues and backing it with real manufacturing capacity. Rising analyst estimates confirm the momentum.

For investors wanting AI data center exposure, VRT—which sports a Zacks Rank #1 (Strong Buy)— is the stronger pick.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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