GE Vernova (GEV) Soars 14.6% After Q2 Beat and Raised Outlook
GE Vernova is proving its post-spin potential. Power and Grid demand are solid tailwinds.
Key Financials
Metric | Actual | Est. | YoY |
---|---|---|---|
Revenue | $9.11B | $8.81B | +11% |
EPS (Dil.) | $1.86 | $1.51 | –60% |
Net Income | $514M | — | –60% |
Adj.EBITDA | $770M | — | +47% |
Gross Margin | 20.3% | — | –40bps |
FCF (YTD) | $1.17B | — | ↑ from $161M |
Segment Highlights
Power
- Revenue: $4.76B (+7%)
- EBITDA: $778M; margin up 260 bps to 16.4%
- 18 Heavy-Duty Gas Turbines shipped (vs. 8 YoY)
- Orders up sharply to 47 gas turbines
Electrification
- Revenue: $2.20B (+23%)
- EBITDA: $322M; margin up 740 bps to 14.6%
- Grid Solutions led growth (HVDC, switchgear, transformers)
Wind
- Revenue: $2.25B (+9%)
- EBITDA: -$165M; margin -7.3%
- Loss driven by offshore delays, tariffs, and Onshore service costs
- RPO down 13% YoY to $22.5B
Backlog & Cash
- RPO (Backlog): $128.7B (+11% YoY)
- Power: $79.1B
- Electrification: $27.5B
- Cash: $7.9B
- Stock buybacks: $1.6B YTD
- Quarterly dividend: $0.25/share
Leadership Commentary
CEO Scott Strazik:
“We are raising our full-year outlook with increased confidence. Grid and Gas Power remain strong, and our lean transformation is taking hold.”
CFO Ken Parks:
“Q2 free cash flow exceeded $1 billion, enabling share repurchases and a $0.25 dividend. Electrification demand, particularly in HVDC, continues to surprise to the upside.”
AI Power Demand – Implied Growth Driver
While AI wasn’t named directly, GE Vernova flagged a surge in demand for grid infrastructure and high-voltage solutions, consistent with global data center buildouts driven by artificial intelligence.
“Increased demand and the integration of advanced generation and storage solutions drive the need to update aging infrastructure with new grid integration and automation solutions.”
1. Strong Position in Grid Infrastructure
- Electrification segment (Grid Solutions, HVDC, transformers) saw +23% YoY revenue growth in Q2.
- Management explicitly linked growth to demand for HVDC and switchgear, core components in data center and transmission build-outs.
- RPO for Electrification is now $27.5B, up 33% YoY, indicating robust future demand.
📌 Why it matters:
AI data centers are highly power-dense and often require dedicated substations and grid upgrades. GEV is one of the few global players with turnkey HVDC and grid software capabilities.
⚙️ 2. Gas Power = Dispatchable AI Backup
- GEV’s Gas Power segment is benefiting from utilities adding fast-ramping, dispatchable generation to support variable loads.
- In Q2, GEV shipped 18 Heavy-Duty Gas Turbines (up from 8 YoY).
- Orders rose sharply, especially in aeroderivatives, which offer flexible peaking power.
📌 Why it matters:
AI server farms can’t afford downtime. When renewables dip or grids are overloaded, GEV’s gas turbines keep data centers online—especially in markets without nuclear or sufficient batteries.
⚠️ 3. Wind Still a Margin Drag
- Despite growing grid demand, GEV’s Wind segment posted a –$165M loss in Q2, with offshore challenges and U.S. policy risk weighing on profitability.
📌 Implication:
To fully capitalize on AI tailwinds, GEV must streamline Wind or isolate it, so Power and Electrification can drive valuation.
🧠 Bottom Line
GE Vernova is emerging as a key hardware backbone provider for the AI power revolution. Its unique combination of:
- Grid scale infrastructure
- Gas turbines for backup
- Installed base in 25% of global electricity
makes it one of the best-positioned industrials for this macro theme.
But it needs to:
- Keep growing Electrification profitably
- Control Wind losses
- Execute large HVDC projects without overruns
Do that—and it becomes a power sector pure play on AI infrastructure.
Stock Reaction
- GEV closed up 14.6% at $629.03, gaining $80.04 following its Q2 earnings release.
- Driven by strong Power/Electrification performance and a clean cash flow beat.