The industrial sector is riding several powerful spending cycles, and RTX (RTX +1.74%) sits right in the middle of two of them: aerospace and defense. Demand looks healthy across its businesses, and its huge backlog gives investors plenty of visibility into what’s ahead.
That strength is also why the stock looks priced for a lot of good news. RTX is up about 45% over the past year and now trades just below its 52-week and all-time high of $227.
Image source: Getty Images.
So if you’re trying to keep industrial exposure in your portfolio but want something that feels less fully valued, it may make sense to look beyond the usual defense bellwethers. Two interesting options are Vertiv (VRT -6.80%) and Quanta Services (PWR -3.62%). Both are tied to infrastructure spending driven by artificial intelligence (AI), and have the kind of momentum that can matter in this sector.
Vertiv: The data center cooling and power specialist
Vertiv makes power and cooling infrastructure. Data centers generate huge amounts of heat, and hyperscalers desperately need good cooling so their billion-dollar AI investments don’t go up in flames. With its deep expertise in thermal management, the company can capitalize on that opportunity.
But that’s just part of the story. Are the numbers backing that up?
In the second quarter, the company generated $3.27 billion in total revenue, up 24% year over year, driven by AI data center sales across the Americas and Asia Pacific regions. Adjusted diluted earnings per share (EPS) grew 60% to $1.52.
On the back of those impressive results, management raised its full-year revenue guidance to $14 billion, representing a 37% year-over-year gain, and adjusted EPS guidance to $6.70 at the midpoint, up 60%.
Today’s Change
(-6.80%) $-19.89
Current Price
$272.54
Key Data Points
Market Cap
Day’s Range
$270.31 – $281.67
52wk Range
$118.70 – $379.94
Volume
5.6M
Avg Vol
6.3M
Gross Margin
35.73%
Dividend Yield
0.08%
As for the stock, Vertiv is up 122% over the last 52 weeks. You might think it’s hypocritical for me to say RTX, with its 45% growth, is already too high when I’m now talking about a triple-digit performer, but the numbers aren’t the only consideration here. Wall Street analysts rate the stock a “strong buy,” while RTX sits at a “moderate buy.”
Second, Vertiv stock is trading nowhere near its 52-week high, let alone its high target price set by analysts. I can’t say the same for RTX.
So while Vertiv has already enjoyed a huge run, its strong fundamentals, rising guidance, and favorable analyst sentiment make me more amenable to its growth story.
Quanta Services: The grid builder that AI data centers depend on
Then there’s Quanta Services, another industrial company benefiting from the infrastructure spending required to support AI. It specializes in building and upgrading electrical transmission and distribution infrastructure, essentially helping move power from where it’s generated to where it’s needed.
Today’s Change
(-3.62%) $-26.16
Current Price
$696.15
Key Data Points
Market Cap
Day’s Range
$688.38 – $712.00
52wk Range
$363.01 – $788.75
Volume
1.5M
Avg Vol
1.2M
Gross Margin
13.68%
Dividend Yield
0.06%
And like Vertiv, the numbers back up the opportunity. Quanta’s second-quarter consolidated revenue grew 41% to reach $9.6 billion, while adjusted diluted EPS went up 71% to $4.24. The company also reported a record backlog of $53.4 billion.
And management reports that it has “significantly increased 2026 financial expectations across all metrics.” That’s something potential investors love to see. To seal the deal, Quanta also has a “strong buy” rating from Wall Street.
RTX is still strong, but here’s why I’d take Vertiv or Quanta
Despite my praise for these two industrial stocks, I want to be clear: I don’t think RTX is a bad investment. If anything, the fact that RTX trades at a lower valuation multiple (39x on a price-to-earnings basis) than both Vertiv (66x) and Quanta (78x) makes the stock an even more compelling alternative.
However, Vertiv and Quanta trade at higher valuations because both companies are benefiting from the early stages of what could be a huge multiyear AI infrastructure boom. On the other hand, RTX is already a more established business with much of its current growth tied to a defense and aerospace cycle that the market has clearly recognized.
When deciding, it comes down to paying less for a more mature growth story versus paying more for what I believe could be a longer runway.
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