Drink up. No pity party here about those lousy Big Tech earnings because we found the silver lining in that dark AI cloud hanging over Wall Street: water stocks Veralto and Pentair.
Both companies delivered solid earnings this week tied to -- drum roll, please -- artificial intelligence. And their stocks popped: Veralto, 8.6% in the past five days, Pentair, 19%, according to Dow Jones Market Data.
Veralto was riding the wave Friday from its earnings report the day before. Shares were 10.6% to $114.94, making it one of the S&P 500's best performers Friday and putting it on track for its biggest daily percentage gain ever.
Late Thursday, Veralto beat analysts' expectations and raised its full-year guidance. An important detail for the company was the growth of its data-center business, which -- though small -- more than doubled in the third quarter.
On the earnings call, management told investors that demand for both its water-treatment and its analytics business segments -- key to data centers -- was "very strong."
"Good exposure here, small base of business" but growing in the "strong double-digits and we would expect that to continue for the foreseeable future," the executives said.
Two days earlier, on Tuesday, Pentair showed that AI trade isn't only chips, energy, heavy equipment, and the like. It's water, too, for cooling those data centers filled with big servers.
And Pentair manufactures water-cooling systems for data centers, though the bulk of its business is still water filters, pumps, and swimming pool equipment.
Pentair's financials and outlook were clearly sound. Earnings were a beat and the company reaffirmed the midpoint of its full-year adjusted earnings guidance management, which reflected both inventory clearance and its acquisition of Taco Group Holdings, a heating and cooling systems manufacturer. the $1.4 billion deal closed on Oct. 1.
"Taco provides Pentair with an additional growth engine and increases our exposure to attractive end markets, including HVAC data centers and related infrastructure development," management told investors on the earnings call.
On Friday Pentair was up 0.7% to $66.22 and was on track to close higher for a fourth consecutive trading session. With its 19% gain, the stock could log its best weekly performance since March 2020, according to Dow Jones Market Data.
No drowning any sorrows this week. Veralto and Pentair are proof that the AI trade isn't dead just yet.
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