Vestas: Riding the U.S. Wind Energy Boom and Building a High-Margin Future

The global wind energy sector is at a pivotal inflection point, and Vestas Wind Systems A/S (VWS.CO) is positioning itself to dominate the U.S. market—a critical battleground for renewable energy growth. With Q3 2025 order intake figures (1,442 MW) and a record €67.3 billion combined backlog, Vestas is leveraging its "value over volume" strategy to capitalize on the U.S. wind energy boom while fortifying its Service segment as a profit engine. For investors, this represents a compelling case of strategic execution, operational efficiency, and long-term margin expansion.

Strategic Positioning in the U.S. Wind Energy Boom

The U.S. has emerged as a cornerstone of Vestas' growth strategy. In Q3 2025, the company secured a 527 MW order in the U.S., part of a broader push to meet surging demand for clean energy infrastructure. This follows a 128 MW project in Chile and 269 MW in Romania, but the U.S. remains the standout. The Biden administration's Inflation Reduction Act (IRA) and state-level renewable mandates have created a policy tailwind, with the U.S. Department of Energy projecting 100 GW of new wind capacity by 2030. Vestas is doubling down on this opportunity by expanding its U.S. manufacturing footprint and investing in digital tools to optimize project delivery.

The 527 MW U.S. order is emblematic of Vestas' shift toward high-margin, long-term contracts. Unlike the race to win low-price bids, these projects emphasize performance guarantees and lifecycle management—areas where Vestas' Service segment excels. This approach not only stabilizes revenue but also aligns with the industry's shift toward decarbonization and cost predictability for end-users.

Expanding Backlog: A Catalyst for Future Revenue

Vestas' order backlog has grown to €67.3 billion as of Q2 2025, with €31.4 billion in turbine orders and €35.9 billion in service agreements. This backlog is a critical asset, providing visibility into future cash flows and shielding the company from near-term market volatility. The Service segment alone now manages 159 GW under contracts, with a €36 billion backlog that generates stable, recurring revenue.

The Service segment's EBIT margin of 17.2% in Q2 2025 (up from 151 GW in Q2 2024) underscores its role as a profit anchor. Vestas is accelerating its "Service recovery plan," targeting a 25% EBIT margin by 2026. This is achievable through automation, predictive maintenance, and long-term agreements like the AOM5000, which lock in customers with performance-based pricing. For investors, this segment's resilience is a hedge against the cyclical nature of turbine sales.

Operational Efficiency: The Margin Expansion Play

Vestas' operational improvements are equally compelling. The company's Q2 2025 EBIT margin of 1.5% (up from 0.4% in Q1) reflects progress in reducing warranty costs and optimizing offshore manufacturing. The V236-15.0 MW turbine platform, while capital-intensive, is a long-term differentiator in the offshore market. Meanwhile, digital tools are streamlining project execution, reducing downtime, and enhancing customer satisfaction.

The U.S. market, with its vast wind resources and policy tailwinds, is a proving ground for these efficiencies. Vestas' investments in local manufacturing and supply chain resilience are paying off, as evidenced by its ability to secure large-scale projects despite global headwinds. This operational discipline is critical for achieving its full-year 2025 guidance of 4–7% EBIT margin—a target now within reach given the strong backlog and Service segment performance.

Investment Case: A High-Margin, Recurring Revenue Play

For long-term investors, Vestas offers a rare combination of growth and margin expansion. The U.S. wind boom provides a near-term catalyst, while the Service segment's recurring revenue model ensures durability. With a €36 billion service backlog and a 25% EBIT margin target, the Service segment alone could generate €9 billion in annual EBIT by 2026—a 130% increase from 2025 projections.

Moreover, Vestas' focus on operational efficiency—reducing costs in turbine production and leveraging digital tools—positions it to outperform peers in a sector where margins are often squeezed by competition. The company's Return on Capital Employed (ROCE) of 11.5% in Q2 2025 (up from 2020 levels) further validates its capital allocation discipline.

Risks and Considerations

While the U.S. wind market is robust, political uncertainty and supply chain bottlenecks remain risks. However, Vestas' "value over volume" strategy and Service segment diversification mitigate these concerns. Investors should also monitor the Q3 2025 earnings release on 15 August 2025 for updates on U.S. project execution and margin trends. Historically, VWS.CO has demonstrated a 50.00% 3-day win rate, 70.00% 10-day win rate, and 60.00% 30-day win rate following earnings releases, with a 30-day average return of 2.50% and a maximum return of 5.00%.

Conclusion: A Strategic Winner in the Renewable Energy Transition

Vestas is not just a turbine manufacturer—it's a service-driven, high-margin player in the renewable energy transition. Its U.S. momentum, expanding backlog, and Service segment recovery create a compelling investment case. For those seeking exposure to the clean energy revolution with a focus on operational excellence, Vestas is a stock worth watching.

"""