GE Vernova: A Turbine’s Tale

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The air, as always, crackles with the absurd. One hears whispers – not of market corrections, but of governors and even, dare I say, the specter of a former president, launching an initiative. It concerns PJM Interconnection, that vast, humming beast of a power grid, and the inconvenient truth that keeping the lights on for the masses is proving… expensive. The usual suspects – the tech giants, those digital Behemoths – are accused of draining the lifeblood from the system, demanding ever more power for their data cathedrals. A plan, hatched in the halls of power, proposes a rather… direct solution: make them pay. Pay, as if one can simply make a corporation feel discomfort. It’s a charmingly naive notion, really.

The independent power providers, those valiant, if somewhat predictable, souls – Constellation Energy and Vistra – have already begun to tremble. Their stock prices, predictably, have wilted under the shadow of potential price caps. But amidst this predictable drama, a curious bloom appears: GE Vernova (GEV 2.48%). It surges, not with triumphant fanfare, but with the quiet confidence of a craftsman who knows his tools are in demand. They, it seems, are well-positioned to provide the very turbines and grid solutions this frantic buildout requires. A tidy situation, wouldn’t you agree?

The stock is up 77% in the last year. A respectable climb, certainly, but hardly a signal to abandon all reason. Still, one suspects, there’s more to this story than meets the eye. Let us delve, shall we, into the peculiar alchemy of energy, technology, and the eternal human appetite for… well, everything.

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The Hunger for Watts

GE Vernova, you see, doesn’t merely sell technology. It peddles the very lifeblood of the modern age: electricity. Their equipment – gas, steam, wind turbines, the intricate latticework of the grid – generates nearly a quarter of the world’s power. Investors, those restless spirits, have descended upon the stock like vultures, drawn by the insatiable demand for gas turbines and grid equipment. And what fuels this demand? Ah, the data centers. Those gleaming, air-conditioned temples to the digital gods. And what powers the data centers? The same thing that powers everything else, naturally. It’s a rather circular arrangement, when you think about it.

In the third quarter, gas power orders increased by a rather astonishing 50%. Equipment orders more than doubled. They received orders for 20 heavy-duty gas turbines – colossal machines designed to run continuously, churning out power like some industrial leviathan. And 13 orders for their HA turbines – more advanced, high-efficiency units. The truly remarkable part? Customers are paying GE Vernova simply to hold a spot in the manufacturing line. A preposterous notion, really. A sort of industrial purgatory, if you will. They have 33 gigawatts of firm orders and another 29 GW in slot reservations. And, naturally, they can charge a premium for future access. It’s a seller’s market, naturally. A most agreeable situation for those who hold the turbines.

Infrastructure and the Imminent Boom

GE Vernova was already enjoying a robust appetite for its wares. But this intervention from the authorities – this attempt to force the tech giants to shoulder their share of the burden – promises to accelerate the trend. The administration proposes auctions, offering developers 15-year contracts, and making the tech companies – Microsoft, Alphabet, Meta Platforms – responsible for the bill, whether they actually use the power or not. A rather draconian measure, wouldn’t you say? But then, what is power if not the ability to impose one’s will?

The plan, if implemented, could support around $15 billion in new power plants. Analyst Julien Dumoulin-Smith of Jefferies, a man who presumably understands these things, has declared GE Vernova the “clearest winner.” They are, after all, a top supplier of the necessary equipment. One must remember, however, that this is merely a “statement of principles.” A rather flimsy foundation upon which to build an investment strategy. Still, it’s a roadmap, of sorts. A suggestion, a nudge in the right direction. A whisper in the wind.

A Turbine for the Ages?

The upside for GE Vernova lies in the continued buildout of natural gas infrastructure. A rather prosaic reality, perhaps, but a reliable one. But there’s more to the story. Their services business – maintaining, upgrading, and repairing their vast fleet of turbines – provides a steady stream of recurring revenue. In the third quarter, they earned $1.74 billion from equipment, but a remarkable $3 billion from services. A most sensible arrangement.

This aspect of their business provides visibility into future earnings for years to come. They currently have a total remaining performance obligation for services of $81.2 billion. Of this, 53% will be recognized within the next five years, and a staggering 91% over the next 15.

With tailwinds from growing turbine purchases and years of service revenue from its installed base, GE Vernova appears to be a stock that can benefit from this burgeoning demand for years to come. A rather solid investment, wouldn’t you say? Though, one should always remember, the future is a fickle mistress. And the market? A most unreliable narrator.

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2026-01-22 03:53