GE Vernova Sees Robust Growth Amid Global AI Surge, With Upside Potential Ahead.

GE Vernova has seen a significant 85% YTD rise, outperforming the S&P 500's 9% increase. The company's shares have been driven by its involvement in the global AI power surge, with potential margin upside ahead. GE Vernova is expected to benefit from growing demand for AI and related technologies.

GE Vernova (NYSE:GEV) has experienced a remarkable year-to-date (YTD) increase of approximately 85% in its share price, significantly outperforming the S&P 500's 9% growth. This impressive performance can be attributed to the company's strategic positioning in the burgeoning global AI power surge. With a strong focus on the energy sector, GE Vernova is poised to benefit from the rising demand for AI and related technologies.

Since its spin-off from General Electric in April 2024, GE Vernova has been at the forefront of the AI momentum trade. The company's broad portfolio, encompassing gas, wind, and nuclear power, places it in an advantageous position to capitalize on trends such as the AI data center build-out, growing electric vehicle adoption, and industrial electrification. The Electrification segment, in particular, is meeting high demand for grid modernization in the U.S., setting up the necessary infrastructure to withstand increasing loads.

The company's robust backlog of $129 billion in orders, coupled with growing slot reservations for gas turbines, enables GE Vernova to assert pricing power and enhance margins. This positioning is further supported by the company's 2028 EBITDA margin targets for the Power and Electrification segments, which are already within reach.

GE Vernova's Q2 2025 financial results underscore its strong performance. Revenues increased by 12% year-over-year (y/y) to $9.1 billion, with equipment sales growing by 18% y/y. Adjusted EBITDA rose by 25% y/y to $770 million, reflecting a margin expansion of 210 basis points to 8.5%. The company also raised its full-year guidance in revenue, free cash flow, and margins.

The global electricity demand is expected to grow at an average of 4% annually through 2027, driven by rising industrial electrification, electric vehicle adoption, and data center expansion. This growth is particularly pronounced in regions like China and India, where demand is forecast to grow at above-average rates. The U.S. is also expected to show strong long-term growth, with recent estimates suggesting a 2% annual increase through 2050.

GE Vernova's involvement in the nuclear business further solidifies its strategic position. In May, the company received approval to deploy the first small modular reactor (SMR) in the Western world through its alliance with Hitachi. Additionally, Swedish utility Vattenfall selected GE Vernova as a candidate to supply SMRs, recognizing the company's ability to meet Sweden's growing electricity demand.

The company's high slot reservations for gas turbines, currently at 25 GW, indicate strong demand for its products. This trend, coupled with a favorable mix shift towards more profitable service offerings, suggests that GE Vernova's margins will continue to trend higher. The company's production capacity is limited, with current capacity at around 50 turbines per year, but plans to increase this to 70 to 80 turbines annually.

Overall, GE Vernova's strategic positioning in the AI power surge, coupled with its robust financial performance and strong order backlog, positions the company favorably for continued growth and margin expansion.

References:
[1] https://seekingalpha.com/article/4816272-ge-vernova-riding-global-ai-power-surge-margin-upside-ahead