Key Takeaways
- GE Vernova fell 10% today, with Vistra and Constellation Energy, after Democrats won both chambers of Congress.
- Only about 20% of GE Vernova’s contracted gas turbine capacity serves data centers.
- Eaton and Caterpillar just reported rising data center demand, and new curbs would face a presidential veto.
- Next up: whether GE Vernova’s gas contracts reach the 130 gigawatts management expects by year-end.
GE Vernova (GEV) fell 10% this morning after Democrats won the Senate and the House in Tuesday’s midterms, and investors sold AI power stocks.
Vistra (VST) fell 12% and Constellation Energy (CEG) fell 7%. Yet Eaton (ETN) and Caterpillar (CAT) are still seeing data center growth.
Evercore ISI analysts led by Amit Daryanani wrote in a note: “Assuming a more restrictive data center development environment, this could create incrementally more negative sentiment for AI infrastructure exposed names.”
Sentiment is the key word here.
Most of these turbines aren’t for data centers
GE Vernova had 122 gigawatts of gas equipment under contract at the end of September. As of midyear, only about 20% of its contracted gigawatts served data centers.
The new Congress doesn’t sit until January, and any bill curbing data center building would still need President Trump’s signature or two-thirds of both chambers to override his veto.
And analysts expect GE Vernova’s earnings to more than double from 2026 to 2028:
GE Vernova (GEV): normalized EPS, actual and consensus estimates, $ per share, fiscal 2024-2028 (TIKR)
Congress can’t cancel signed orders, so I wouldn’t expect today’s news to move those estimates.
TIKR tracks 38 analysts on GE Vernova. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on GE Vernova, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See GE Vernova’s Analyst Ratings
Eaton and Caterpillar aren’t seeing a slowdown
A real data center slowdown would hit Eaton and Caterpillar too. Eaton’s Electrical backlog was up 46% year over year at the end of September, and it raised its organic growth guidance on Tuesday. Caterpillar’s power generation sales jumped 30% in the third quarter, mainly on turbines and engines for data centers.
Vistra and Constellation are still betting on demand: Vistra closed its purchase of Cogentrix Energy’s 10 gas plants on Oct. 30, and Constellation won a conditional Energy Department loan commitment of up to $5 billion last week for its nuclear plants. Their reports, Vistra’s this week and Constellation’s next, will show whether data center customers are hesitating.
The multiple has come way down
GE Vernova traded at 37x forward earnings at Monday’s close, against a 55x average over the past year:
GE Vernova (GEV): forward (NTM) P/E, last year (TIKR)
At today’s price, it’s even lower.
Frankly, this drop looks like a buying opportunity to me.
Of course, if congressional hearings make hyperscalers rethink their AI spending, GE Vernova’s grid orders would show it first. For now, watch whether its gas contracts hit 130 gigawatts by year-end, as management expects.
So what is GE Vernova stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what GE Vernova could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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