We're raising our price target on GE Vernova as AI fuels another monster quarter

CNBC Finance

7 min read

GE Vernova is ripping to the upside following a monster quarter, thanks to the insatiable demand for energy fueling the AI boom. Revenue for the three months ending March 31 increased about 16% year over year to $9.34 billion, topping expectations of $9.22 billion, according to LSEG. Orders increased 71% organically to $18.3 billion, driven by growth across all segments. As a reminder, analysts focus on orders to gauge demand rather than sales, which may reflect past order fulfillment. Earnings per share (EPS) of $17.44; however, this isn't comparable to the $1.86 estimate, given that it includes $4.5 billion in pre-tax M & A net gains, primarily from Prolec GE. Accounting for this, LSEG pegs the adjusted EPS result at about $2.08, still better than expected. GEV 1Y mountain GEV 1-year return Shares of GE Vernova soared more than 12% on the print, hitting an all-time intraday high of $1,142 shortly after the opening bell. In recognition of Wednesday's rally, we're raising our price target to $1,300 from $1,000. As Jim Cramer put it during the Club's Morning Meeting, "This one may be one for the ages." We're keeping our buy-equivalent 1 rating on the stock. Bottom line The word "insatiable" might be insufficient to describe the type of demand GE Vernova is seeing for its natural gas turbines and other products used to power data centers. While the company's wind business remains under pressure, sales of gas and electrification solutions were off the charts, leading management to increase its outlook for the year and beyond. This is not surprising, considering Nvidia CEO Jensen Huang's five-layer cake of AI starts with energy as the base and builds up from there to chips, infrastructure, models, and applications. So, all AI roads lead back to energy demand, and that puts GE Vernova on the ground floor of the Fourth Industrial Revolution. Put another way, whenever you hear about a new power commitment or data center project, understand that the required gigawatts will likely come from GE Vernova. Companywide, GE Vernova's adjusted EBITDA margin also came in more than a full percentage point ahead of expectations. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. GE Vernova Why we own it : The company has several powerful secular tailwinds at its back, including the need for more reliable power and electrification, especially as AI drives up demand for energy-intensive data centers.Â GE Vernova may also benefit from deals as countries work with the Trump administration to reduce bilateral trade deficits. Competitors : Siemens Energy , MHI Most recent buy : Oct. 7, 2025 Initiated : May 13, 2025 In addition to strong margins, sales, and earnings, GE Vernova delivered robust $13 billion in order growth, swelling its backlog to $163 billion. Management now expects to achieve a backlog valued at $200 billion by 2027, a year ahead of schedule. In gas power, the backlog stands at 100 gigawatts, up from 83 gigawatts in the prior quarter. "Approximately 80% of our total gigawatts under contract are with traditional customers, with the remaining 20% explicitly supporting data centers," CEO Scott Strazik said on the conference call with investors. Better yet, and no doubt supporting the incredible move in the stock on Wednesday, Strazik said the current second quarter is off to a strong start: "Quarter to date, we have booked more power equipment orders in terms of value than we did in all of Q1 2026," he said. That's amazing, considering the second quarter isn't even halfway into the books. With incredible demand comes pricing power, and GE Vernova is poised to capitalize. Strazik noted that on a kilowatt basis, orders in the first half of 2026 are tracking to be priced about 10 to 20 points higher than in the fourth quarter of 2025. To give you an idea of how much power these data centers take, a gigawatt is 1 million KW. A gigawatt of power can power more than 750,000 homes for a year. Moreover, the more turbines GE Vernova can put into service, the larger the installed base it can service later on. So, with every delivery, the potential of GEV's service book also grows. While investors are focused primarily on gas turbine demand, there is also a long runway for growth in electrification, especially following the Prolec acquisition, which closed in early February. As a result, expect this segment to garner more attention going forward. Strazik said the segment is expected to do about $14.5 billion in revenue this year, and that the annual addressable market will grow to about $300 billion by the end of the decade. Prolec will be a major factor in GEV capturing as much of that TAM as possible. "The demand for electrification solutions is being driven not just by traditional customers, but also data centers, which accounted for approximately $2.4 billion in orders in Q1, more than the full year ofÂ 2025," Strazik said. Wind remains a drag, as the U.S. onshore wind market remains weak. However, Strazik said a strategic review found an "opportunity for over $100 million in EBITDA improvement in future years, driven by the lower costs and better quality performance." Finally, capital expenditures came in a tad higher than expected, but strong operating cash flow performance set the stage for free cash flow to outperform expectations. In fact, the company generated more free cash flow in the first quarter of 2026 than it did in all of 2025. Segment results In power, revenue increased 10% organic to $4.97 billion, outpacing the $4.95 billion estimate. The segment delivered an EBITDA margin of 16.3%, representing a 470-basis-point year-over-year expansion. In electrification, revenue increased 29% organic to $2.96 billion, beating the $2.87 billion estimate. The segment delivered an EBITDA margin of 17.8%, representing a 670-basis-point year-over-year expansion. In wind, revenue decreased 25% organic to $1.43 billion, missing the $1.52 billion estimate. The segment delivered an EBITDA margin of -26.7%, down from the -7.9% from a year ago. Updated guidance For the full year 2026: GE Vernova now expects 2026 revenue of $44.5 billion to $45.5 billion, a $ 0.5 billion increase at both the upper and lower ends of the forecast range, and ahead of the $44.43 billion estimate, according to LSEG. Management's adjusted EBITDA forecast is now in the range of 12% to 14%, a 1-percentage-point increase on both the low and high ends, bringing the guide right in line with expectations. Driving the upward revision, management now expects its power EBITDA margin of 17% to 19%, up from the previously forecast 16% to 18% range. In electrification, the team expects sales of $14 billion and $14.5 billion, up from the prior range of $13.5 billion to $14 billion, with an EBITDA margin of between 18% to 20%, up from the prior 17% to 19%. For the second quarter: Power business's organic revenue growth of 15% to 17% on the back of stronger demand for both equipment and services. The segment's EBITDA margin is expected to be 17% to 18% Electrification revenue of $3.3 billion to $3.5 billion, with "modest sequential EBITDA margin expansion." Wind revenue to decline mid-teens percentage, with an EBITDA loss of about $200-to-$300 million due to a decrease in onshore wind equipment volumes. (Jim Cramer's Charitable Trust is long GEV. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

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We're raising our price target on GE Vernova as AI fuels another monster quarter

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