GE Vernova (GEV -3.38%) stock pulled back despite reporting strong third-quarter numbers on Oct. 28. In fact, the natural gas turbine and grid solutions giant is selling power equipment faster than it can build it, and it just announced a massive $9 billion acquisition.
Still, the stock fell 4.9% at its lowest point in Friday’s trading as several analysts lowered their price targets on the stock amid the artificial intelligence (AI) infrastructure stock sell-off.
Image source: Getty Images.
Key numbers from GE Vernova’s Q3 earnings report
GE Vernova’s 27% year-over-year revenue growth in Q3 beat estimates, and orders surged 96% organically. Backlog grew by $20 billion during the quarter to a record $197 billion. Management expects it to top $200 billion in Q4.
AI data centers, new factories and the broader electrification of the economy all need reliable, round-the-clock power, and the existing grid can’t keep up. Gas turbines can provide that power quickly and on-site.
Demand is so high that customers are paying GE Vernova a premium just to book factory slots for turbines years in advance. Last quarter, the company sold several slots for delivery in 2032.
Then there’s the grid business, which is an equally strong growth engine due to a severe demand-and-supply imbalance in critical power equipment such as transformers.
To lock in supply of parts for such equipment, GE Vernova will buy Trench Group for $9 billion.
So why is the stock falling?
GEV – GE Vernova
$857.87-$29.98 (-3.38%)
NYSE · As of 4:00 PM ET 10/30/26
Is GE Vernova stock a buy?
GE Vernova’s third business, wind turbines, reported only 3% revenue growth last quarter. The Trench deal will also add significant debt as GE Vernova expects to fund half the purchase price with debt.
Marc Bianchi from TD Cowen cut GE Vernova’s stock price target to $1,125 per share from $1,235 per share, while analysts from Jefferies lowered the price target to $1,100 per share from $1,185 per share. Analysts from Citigroup (C -2.48%) and JP Morgan (JPM -1.90%) also cut the stock’s price targets.
To be sure, none of these analysts are bearish on GE Vernova. The concerns mainly revolve around conversion timing and limits on margin expansion.
The business remains as strong as ever. Management raised full-year guidance, including a significant increase in free cash flow to $16.5 billion at the midpoint, up from $12 billion previously. It also doubled stock buyback authorization to $20 billion.
The Trench deal, if it goes through in 2027, should be a game-changer as it’s a vertical integration move. Trench, which makes key components for high-voltage grid equipment, is a supplier to GE Vernova. Buying it will mean GE Vernova can control its own parts supply for faster deliveries and fatter margins in a rapidly growing market.
GE Vernova’s stock may be stuck in the AI sell-off for now, but the world’s hunger for electricity isn’t going away, and few companies are better positioned to feed it. I’d buy this stock on every dip for the long term.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
