GE Vernova Inc. (GEV) | The Buildout — AI Infrastructure
The Verdict
GE Vernova makes the physical hardware of electricity: gas turbines that generate power, grid equipment that moves it, and software that orchestrates it. In the AI buildout, data centers need new generation and grid infrastructure, and GE Vernova sells both the turbines and the substation equipment to connect them. Its scope is expanding from the substation boundary toward inside-the-data-center power electronics.
| Market Cap | — |
| Revenue (TTM) | $41.4B |
| Revenue Growth | +13.0% |
| EBITDA Margin (TTM) | 7.3% |
| Net Cash | $9.2B |
| Earnings Beats | 5 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Orders grew 71% in Q1 and 88% in Q2 — two consecutive quarters above 70% growth.
- Gas under contract reached 116 GW, up from 83 GW at end-2025; management targets at least 125 GW by end-2026.
- Electrification data-center orders were over $5 billion in H1 2026, more than double all of 2025.
- FY2026 free cash flow guidance was nearly doubled to $11.5–$12.5 billion.
- Backlog is $176 billion, roughly half equipment and half services.
What We’re Watching
- SRA conversion is the key near-term test: Q2 ended with 63 GW SRAs versus 53 GW backlog; management expects backlog to surpass SRA in H2 2026.
- H2 free cash flow steps down sharply; full-year guidance implies roughly $1.5–$2.5 billion after about $10 billion in H1.
- Wind remains loss-making with Q2 EBITDA of negative $275 million and full-year loss guided near $400 million.
- Framework agreements and Clinch River remain unresolved: 30–35 agreements were under discussion in Q1, and no Q2 closure or license update was reported.
Thesis is strengthening. Management has raised guidance repeatedly and then delivered above it, across gas contracts, pricing, backlog, and free cash flow. The open question is whether the slot-reservation book converts to firm orders quickly enough, and whether gas demand renews beyond 2031.
Earnings Beat
Q2 2026 revenue reached $11.1 billion, with gross margin of 21.3%. Orders were $24.2 billion, up 88% year over year, for a book-to-bill slightly above 2x. Adjusted EBITDA was $1.2 billion, up 61% with margin up 340 basis points.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $11.1B | $9.3B | $9.1B | +21.9% |
| Gross margin | 21.3% | 19.1% | 20.3% | +100bps |
| EBITDA | $1.1B | $521M | $583M | +83.9% |
| EPS | $2.47 | $17.44 | $1.86 | +32.8% |
| Total backlog | $176B | $163B | n/a | — |
The long-cycle electric power industry is in the early stages of a multi-decade growth opportunity, and we are well-positioned to create substantial value.— Scott Strazik, CEO, July 22, 2026
Management tone: Management's tone on the Q2 2026 call was confident and operational, pairing demand statements with machine counts, output rates, and supply-chain detail. Executives were candid about constraints, including the H2 free-cash-flow step-down and SRA conversion discipline.
Management Guidance
Management raised FY2026 revenue guidance to $45.5–$46.5 billion and free cash flow guidance to $11.5–$12.5 billion, while maintaining adjusted EBITDA margin at 12–14%. Power organic revenue growth was raised to 18–20%, Electrification revenue to $14.5–$15.0 billion, and Wind EBITDA loss was reaffirmed at approximately $400 million. The company also raised its year-end gas under contract target to at least 125 GW and expects to sell more than half of 2031 production slots by year-end.
Trajectory
Revenue is accelerating, with Q2 2026 revenue of $11.1 billion up 18.9% sequentially. Orders grew 88% year over year and backlog reached $176 billion. Gross margin expanded to 21.3%, and adjusted EBITDA margin expanded even as equipment revenue grew faster than services. The drivers are Power and Electrification, while Wind is still shrinking.
The Model
The model projects FY+1 revenue of $45,200 million and EBITDA of $6,283 million (13.9% margin). FY+2 revenue rises to $52,300 million with EBITDA of $8,473 million (16.2% margin). The near term is anchored by order and backlog conversion; FY+2 assumes continued grid, gas, and services growth.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $38.1B | $46.5B | $54.0B |
| YoY Growth | — | +22.1% | +16.1% |
| EBITDA | $2.3B | $6.1B | $8.6B |
| EBITDA Margin | 6.0% | 13.2% | 16.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 4.0% above analyst consensus.
Management raised FY2026 revenue guidance to $45.5–$46.5 billion and free cash flow guidance to $11.5–$12.5 billion, while maintaining adjusted EBITDA margin at 12–14%. Power organic revenue growth was raised to 18–20%, Electrification revenue to $14.5–$15.0 billion, and Wind EBITDA loss was reaffirmed at approximately $400 million. The company also raised its year-end gas under contract target to at least 125 GW and expects to sell more than half of 2031 production slots by year-end.
What Could Go Right — and Wrong
- Gas under contract reaches at least 125 GW by end-2026, with more than half of 2031 production slots sold.
- SRA conversion flips backlog GW above SRA GW by year-end, converting deposits into firm orders.
- Electrification data-center order intake holds above the $5 billion H1 pace; Prolec contributes roughly $3 billion in FY2026 revenue.
- New inside-data-center products — EMS, SST, MV-UPS — book first orders by 2027.
- Wind reaches roughly break-even in Q3 and holds the full-year loss near $400 million.
- SRA conversion stalls at 63 GW, leaving growth dependent on EPC, pipeline, and permitting execution.
- H2 free cash flow normalizes sharply, with implied H2 FCF only $1.5–$2.5 billion.
- Electrification data-center orders decelerate if hyperscaler capex slows.
- Supply-chain and logistics disruptions, including volatility in critical materials or components, delay deliveries or increase costs.
- Wind losses persist and tariff uncertainty delays onshore order recovery.
Looking Ahead
The next 12 months test the gas ramp: management plans to step capacity from roughly 3 GW to 5 GW per quarter starting in Q3 2026, targets at least 125 GW under contract by year-end, and expects backlog GW to exceed SRA GW. In Electrification, delivery of the 5 MW SST to the first hyperscaler later in 2026 and possible MV-UPS or EMS orders point to scope expansion. Nuclear and offshore wind items add secondary catalysts.
- Q3 2026Gas capacity step-up — Tests ramp from roughly 3 GW to 5 GW per quarter.
- H2 2026SRA-to-order conversion — Shows whether backlog GW exceeds SRA GW.
- End 2026125 GW gas under contract — Year-end target raised from at least 110 GW.
- Later 20265 MW SST delivery — First hyperscaler unit; tests inside-data-center scope.
- 2027$200B total backlog target — Target pulled forward from 2028.
- 2027Dogger Bank B/C completion — Offshore Wind installation through better part of 2027.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $34.9B | $38.1B | $41.4B | +9.0% |
| Gross Margin | 17.2% | 19.9% | 20.2% | +260bps |
| EBITDA | $1.6B | $2.3B | $5.5B | +38.3% |
| EBITDA Margin | 4.7% | 6.0% | 7.3% | +127bps |
| Net Income | $1.6B | $4.9B | $9.5B | +214.7% |
| Free Cash Flow | $1.7B | $3.7B | $15.8B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)20.2%
- EBITDA Margin (TTM)7.3%
- Net Margin (TTM)23.0%
- ROIC50.9%
- FCF Conversion414.2%
- SBC / Revenue0.0%
The Company
GE Vernova is a global electric power equipment and services company. Its products generate, transfer, orchestrate, convert, and store electricity, and its installed base generates approximately 25% of the world's electricity. The company operates three reportable segments: Power, Wind, and Electrification.
It manufactures across 91 facilities — 27 in the Americas, 26 in ASEAN, and 38 in EMEA. GEV has been expanding gas capacity through lean methods and incremental machines funded by customer down payments, and it completed the Prolec acquisition in February 2026 for $5.3 billion to add transformer factories in the U.S., Mexico, and Brazil.
Business Segments
Competitive Landscape
The 10-K lists Siemens Energy, Mitsubishi Power, Westinghouse, Framatome, and Rolls-Royce in Power; Vestas, Siemens-Gamesa, Nordex, Envision, and Goldwind in Wind; and Hitachi Energy, Siemens Energy, Siemens, Schneider Electric, Mitsubishi Electric, and ABB in Electrification.
- Siemens EnergyNamed in 10-K across Power and Electrification; not discussed in the provided materials beyond the listing.
- Mitsubishi PowerNamed in 10-K as a Power competitor; not discussed in the provided materials.
- ABBNamed in 10-K as an Electrification competitor; not discussed in the provided materials.
- Hitachi EnergyNamed in 10-K as an Electrification competitor; not discussed in the provided materials.
- VestasNamed in 10-K as a Wind competitor; not discussed in the provided materials.
Supply Chain
GE Vernova spans generation, transmission, orchestration, conversion, and storage. Its customers include utilities and data-center operators; its suppliers provide components and materials.
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