When GE Vernova (GEV) says it's investing in the future, it's not playing around.
The words "Invested in the Future" greet visitors to the recently formed global energy company's website, and that slogan includes providing electricity for the power-hungry artificial-intelligence sector.
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GE Vernova, which held an investor update on Dec. 10, began trading on April 2 and reported its first earnings as a stand-alone company a short time later.
The name is a portmanteau of “verde,” the Spanish word for "green," and “nova,” from the Latin “novus” meaning “new."
The company came into being after the venerable industrial group General Electric split into three publicly traded companies: GE HealthCare, GE Aerospace and GE Vernova, which would focus on electrification and carbonization.
Electrification is a key factor in developing AI.
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The U.S. Department of Energy said in a July study that connection requests for hyperscale facilities of 300 to 1000 megawatts or larger with lead times of one to three years are stretching the capacity of local grids to deliver and supply power. (The hyperscalers, including Amazon and Google, are the major providers of cloud-computing infrastructure and services.)
"The scale of the potential growth of both electricity and the information technology sectors due to AI is extraordinary and represents the leading edge of projected electricity demand growth," the report said.
GE Vernova CEO: Firm just scratching the surface
Earlier this year, Goldman Sachs Research estimated that demand for data-center power will more than double (up 160%) by 2030 as efficiency gains in electricity use slow and the AI revolution gathers steam.
A query using the AI chatbot ChatGPT needs nearly 10 times as much electricity to process as a Google search, the research firm said. “[In] that difference lies a coming sea change in how the US, Europe and the world at large will consume power — and how much that will cost.”
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GE Vernova CEO Scott Strazik told Bloomberg that his outfit has signed multiple contracts to sell natural gas turbines for data centers.
He said that big tech companies are reserving turbines for their planned 5-gigawatt data-center campuses. The goal is to get them up and running as early as 2028, he added.
In the past 30 days alone, GE Vernova has signed 9 gigawatts of reservations for gas turbines from customers including data-center developers, and “that’s just scratching the surface to what’s coming,” Strazik said,
While Amazon (AMZN) , Google parent Alphabet (GOOGL) and Microsoft (MSFT) , are all investing in nuclear power, that buildout will take years and gas is seen as a key way to meet demand this decade.
Bloomberg reported in September that Sam Altman, CEO of OpenAI, the company behind ChatGPT, asked the White House to approve a plan that would place 5-gigawatt AI data centers in different U.S. cities
Five gigawatts is typically enough to power about 3.8 million homes.
During the investor update, Strazik said that 2024 marks the first year in which capital spending at global utilities will exceed that of the oil and gas industry.
"This shift from molecule to electron is only going to accelerate over time. and GE Vernova is so well suited to serve this market," he said.
GE Vernova declared a $1 annual dividend and a $6 billion share buyback as part of its plan to return at least a third of free cash flow to shareholders.
The company also revised 2025 revenue guidance, forecasting $36 billion to $37 billion, narrowed from its previous $35 billion to $37 billion range.
Analyst sees improved visibility into GE Vernova
GE Vernova also guided to high-single-digit-percent revenue growth in 2028, up from its previous mid-single-digit growth projection.
Free cash projections for 2025 are now $2 billion to $2.5 billion compared with GE Vernova's earlier guidance of $1.2 billion to $1.8 billion.
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GE Vernova shares have more than doubled (up 138%) this year, and investment firms are adjusting their price targets for the stock following the event.
JP Morgan analyst Mark Strouse raised its price target on GE Vernova to $367 from $356 and affirmed an overweight rating on the shares, according to The Fly.
The company's fiscal 2025 guidance was slightly below consensus expectations, driven by the wind segment, and it increased long-term targets issued at the March analyst day, which also slightly lagged consensus estimates, Strouse said.
Strouse noted the $6 billion buyback authorization and the dividend, while the commentary remained upbeat on pricing momentum as well as manufacturing execution.
The analyst said visibility into the company has improved and he'd be a buyer of the stock on any weakness.
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Jefferies analyst Julien Dumoulin-Smith raised the investment firm's price target on GE Vernova to $391 from $348 and maintained a buy rating on the shares.
At GE Vernova's analyst day this week the company gave the first long-term guidance refresh for the company since the March projections, Dumoulin-Smith said.
The gas-order book is accelerating faster than expected and wider margins are "where the upside is," the analyst said following what he called a "positive" event.
Evercore ISI raised its price target on GE Vernova to $390 from $385 and reiterated an outperform rating on the shares.
The firm noted that the company increased its long-term targets for profit margin based on adjusted earings before interest, taxes, depreciation and amortization. It also laid out its go-forward capital-allocation strategy and provided incremental clarity on the timing of its current offshore-wind-equipment backlog burn rate.
Evercore noted that GE Vernova shares traded off slightly following the release, which the firm attributes to its guidance of narrowing immediate-term margins. But Evercore remains "bullish on the company's ability to execute."
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