I'm not sure the quoted analyst knows what he's talking about.
From Investor's Business Daily, October 28:
Why is GE Vernova stock falling Wednesday? Despite knockout third-quarter earnings and revenue growth, the General Electric spinoff reported weakness in new orders. GE Vernova stock fell more than 2% Wednesday morning, but shares are off intraday lows. The stock is still up 34% so far this year.
For Q3 2026, GE Vernova (GEV) delivered diluted earnings of $4.81 a share, up 193% from last year, and revenue of $12.64 billion, up 27%. Analysts had expected earnings per share of $3.99 on revenue of $11.99 billion.
GE Vernova's backlog growth is driven by its electrification and power segments; it includes gear for grid upgrades as well as the gas turbines hyperscalers rely on to bring new data centers online as fast as possible. In its power segment, GE Vernova disclosed $21.8 billion in orders — a 178% boost from a year earlier. GE Vernova also announced a deal to buy grid equipment maker Trench Group.
'New Orders And New Slots Missed By A Mile'
However, GE reported 11 gigawatts in new gas equipment contracts, a 45% decline vs. Q2. That includes eight GW in new slot reservation agreements, down 56% sequentially. Slot agreements are tentative orders with a deposit, not binding orders."The +178% Power order headline is mostly existing slots converting; new orders and new slots missed by a mile," said GLJ Research CEO Gordon Johnson. "That's NOT GOOD," he added.
A week before the Q3 report, GE Vernova stock plunged 10% even as analysts projected triple-digit earnings growth, amid an AI sector sell-off. That was in part due to Meta Platforms reporting its first negative cash flow since coming public in 2012.
GE Vernova's guidance for Q4 also indicates a weak quarter for cash, according to Johnson, who's bearish on many AI stocks. "Implied Q4 (free cash flow) is only ($0.7 billion to $1.7 billion), in what is normally the strongest cash quarter," he said.
The analyst recently initiated coverage of, and slapped a sell rating on, GE Vernova ahead of the quarterly report.
"They are deploying customer float at the top of the cycle," Johnson said. "The buyback authorization was doubled to $20 (billion), and Trench was bought at 18x 2026E EBITDA."
$9 Billion For Grid Growth
The $9 billion cash-and-debt deal for Trench Group could strengthen GE Vernova's ability to cash in on grid upgrades driven by AI-related energy demand and electrification trends. GE Vernova expects the deal to close in late 2027."The deal vertically integrates an existing supplier with a complementary product portfolio," said RBC Capital analysts led by Christopher Dendrinos....
....MUCH MORE
GEV has been consciously throttling turbine manufacturing capacity and thus uptake of new orders vs working-down the approaching-$200 billion backlog.
The reason for this is that the industry has been burned, burned big, twice in the last quarter-century by adding capacity that ended up going idle a few years after completion.
GE Vernova could have spent $40 or $50 billion on new plant property and equipment two years ago, with Hitachi and Siemens Energy spending another $10 billion apiece but long memories pointed toward increasing profit margins rather than increasing volume.
Another constraint is a national labor force ill-equipped to learn, much less perform, cutting edge manufacturing. It's the same reason Ford is offering skilled mechanics $150K to start and has thousands of openings unfilled, the workers with the brains and the talents are already employed.
So what's next for GE Vernova?
We'll probably be hearing a lot more about their transformer and fuel cell and nuclear businesses as the turbine business continues to kick off increasing amounts of cash.
And who knows, maybe wind will get subsidized again, what with the new congress and all.
Earlier today:
