GE Vernova: The AI Power Bottleneck Trade Is Far From Over
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Deep Value Investing10.42K FollowersFollow5ShareSavePlay(11min)CommentsSummaryThe December 8 update was very encouraging for GE Vernova, with a sequential 2026 margin and FCF step-up, and 2028 targets are now higher on revenue, 20% EBITDA, and >$22B cumulative FCF.The narrative is intact. Power generation and electrification are both in high demand in the AI data center buildout.Power is effectively sold out through 2028 (and largely into 2030), with a backlog skewed to high-margin services ($65B services vs. $19B equipment within $84B power RPO).Electrification stands out for GEV at a 15% EBITDA margin in Q3, a plan to double RPO from $30B to $60B by 2028, and Q4 was described as the largest hyperscaler-driven order quarter.Hitting a 20 GW annualized run rate by Q3 2026 will largely depend on whether the company is able to secure yttrium (an REE) amid China-related constraints. 3D Horse/iStock via Getty Images Since my last update on GE Vernova Inc. (GEV), the company updated investors with new guidance for 2026 and upgraded some of its 2028 targets. Specifically, the 2026 guide implies a sequential improvement in profitability (11%–13% adjustedThis article was written byDeep Value Investing10.42K FollowersFollowSmall deep value individual investor, with a modest private investment portfolio, split approx. 50%-50% between shares and call options. I have a B.Sc. in aeronautical engineering and over 6 years of experience as an engineering consultant in the aerospace sector. The latter statement is not relevant in any way whatsoever to my investment style, but I thought to add it for self-indulgent purposes. I have a contrarian investment style, highly risky, and often dealing with illiquid options. How illiquid? Well, you can land a Jumbo on the spread and still have clearance for take-off. From time to time, I buy shares, mostly to not be categorized as a degen by my fellow investor friends, therefore the 50%-50% allocation. My timeframe tends to be between 3-24 months.I like stocks that have experienced a recent sell-off due to non-recurrent events, particularly when insiders are buying shares at the new lower price. This is how I often screen through thousands of stocks, mainly in the US, although I may own shares in banana republics. I use fundamental analysis to check the health of companies that pass through my screening process, their leverage, and then compare their financial ratios with the sector, and industry median and average. I also do professional background checks of each insider who purchased shares after the recent sell-off. I use technical analysis to optimize the entry and exit points of my positions. I mainly use multicolor lines for support and resistance levels on weekly charts. From time to time I draw trend lines, taken for granted, in multicolor patterns. Note: I tried to keep my introduction as real, and authentic as possible. I dislike empty suits, high-level BS, deep-level BS, unnecessary jargon, and self-indulgent, third-person written introductions with an air of superiority.Thanks for reading my introduction!Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.