GEV GE Vernova
Elite gas-turbine franchise, improving fundamentals — but priced for a decade of flawless execution.
The story
GE Vernova is the pure-play successor to GE's power, wind, and electrification businesses, anchored by a dominant heavy-duty gas turbine franchise now riding the AI-driven data center power buildout. Its $176B backlog signals multi-year revenue visibility and pricing power, while Wind remains a structurally weak, subscale drag that keeps the consolidated margin far below the Power segment's true economics. The company is mid-turnaround: margins have improved every year since spin-off (-7.8% to 4.4% TTM) as Wind losses shrink and Power/Electrification mix improves, but it is still years from mature industrial-conglomerate profitability.
Revenue growth nudged to 14% (from 13%) given the $176B backlog and AI-datacenter gas turbine demand cited in recent coverage; sales-to-capital raised to 3.4 (from 3.0) toward the realized TTM 3.6, reflecting the asset-light manufacturing/services model performing better than originally assumed. Margin target, terminal growth, beta, and horizon are unchanged — the improving margin trajectory (-7.8%→4.4% TTM) is tracking the prior glide path to 12% industry-normal economics, not exceeding it.
Value drivers
| Revenue growth (Y1) | 14.0% |
| Terminal growth | 3.0% |
| Forecast horizon | 8y |
| Target operating margin | 12.0% |
| Years to target margin | 8 |
| Sales-to-capital | 3.40 |
| Beta | 1.25 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 10.4% |
| Terminal WACC | 9.2% |
Valuation bridge
| PV of explicit FCFF | 20.54B |
| PV of terminal value | 57.16B |
| Equity value | 83.40B |
| ÷ shares → per share | $313.13 |
News
bullish +0.20 · 8 articles
- Elon Musk's AI Data Centers Need So Much Power He's Buying Gas Turbine Companies -- Who Else Benefits?
- $5,000 in GE Vernova at Its 2024 Low Would Be Worth This Much Now
- Scott Strazik's GE Vernova Has a $176 Billion Backlog. So Why Did Wall Street Sell the Stock?
- 3 Cash-Heavy Stocks Worth Your Attention
- GE Vernova vs. NuScale Power: Which Industrials Stock Is a Better Buy in 2026?
- Sector Update: Energy Stocks Higher Late Afternoon
- GE HealthCare Stock Soars After Earnings—and It’s Suddenly the Best Performing GE
- Vertiv Earnings Beat Estimates. Why the Stock Is Falling.
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 47.16B | 14.0% | 5.3% | 2.51B | 1.70B | 802.52M | 727.15M |
| 2 | 53.02B | 12.4% | 6.3% | 3.32B | 1.72B | 1.60B | 1.31B |
| 3 | 58.78B | 10.9% | 7.2% | 4.25B | 1.69B | 2.55B | 1.90B |
| 4 | 64.23B | 9.3% | 8.2% | 5.25B | 1.61B | 3.65B | 2.46B |
| 5 | 69.19B | 7.7% | 9.1% | 6.32B | 1.46B | 4.86B | 2.97B |
| 6 | 73.44B | 6.1% | 10.1% | 7.41B | 1.25B | 6.16B | 3.41B |
| 7 | 76.80B | 4.6% | 11.0% | 8.48B | 987.42M | 7.49B | 3.76B |
| 8 | 79.10B | 3.0% | 12.0% | 9.49B | 677.61M | 8.81B | 4.00B |
Key risks
- Wind segment remains loss-making and could delay margin convergence
- Turbine order book concentration in AI/data-center power demand could prove cyclical
- Execution risk on converting backlog to margin given historical fixed-price contract losses
Catalysts
- Continued backlog conversion and pricing on new gas turbine orders
- Wind segment restructuring reaching breakeven
- Grid/electrification demand from renewables buildout and AI power infrastructure