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GE Vernova
GE Vernova与西门子能源、三菱重工并称全球燃气轮机市场的三大寡头。
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Despite the streamlining, shareholders who stuck with GE for 20 years as of Nov. 8, 2021, lost 38% while the S&P 500 made 524%. The following day, the company announced it would split into three. Investors who bought shares then and held on to each of the spinoffs have made more than 600%, beating the S&P 500, Bitcoin, and Nvidia.
GE HealthCare(GEHC)
Management predicted that GE HealthCare Technologies would be the fastest growing of its three companies, but it has actually been the slowest since its spinoff in early 2023, and profit margins have been lower than planned. Trade tensions with China have weighed on demand, and hospitals have been cautious on big-ticket purchases while watching for changes to Medicare reimbursements. GE HealthCare has since returned 42%, or about half as much as the S&P 500.
GE Aerospace(GE)
Next came a spinoff of energy businesses in April 2024 into something called GE Vernova. What was left were the prized jet engine and related businesses. These were renamed GE Aerospace and kept the ticker symbol GE. Sales growth and profit margins there have both been better than promised. Global air traffic is healthy and growing. There is a multiyear backlog for jumbo jet orders, which means there’s a multiyear backlog for engines. Analysts say U.S. airlines appear poised for a prosperous 2026. I don’t believe a word of it, which historically has been a strong indication that it could actually happen.
GE Vernova(GEV)
Now, GE Vernova. Four years ago, it was thought the ugliest child of a family not known for its looks. Management predicted minimal sales growth. It described its thinly profitable gas turbines as “stabilizing” and seemed to want to call more attention to windmills.
Initially, GE referred to the business as Renewable Energy & Power, and when it unveiled the name Vernova in 2022, the explanation went on like a juice bar enthusiast with too much to say about antioxidants: a “combination of ‘ver,’ derived from ‘verde’ and ‘verdant,’ to signal the greens and blues of Earth, and ‘nova,’ from the Latin ‘novus,’ or ‘new,’ reflecting a new and innovative era of lower-carbon energy that GE Vernova will help deliver.”
Instead, what Vernova is delivering are gas turbines the size of houses, as many as it can make, at ever-higher prices, with a backlog that’s approaching the end of the decade. The popular explanation for this is that artificial intelligence is driving demand for electricity, and firing up more natural gas is the easiest way for utilities to meet demand. That’s part of it, and the AI glow might help explain why shares are up about 400% since the spinoff.
But there’s a larger factor. “We actually estimate that electrification of the U.S. economy and specifically buildings—residential, nonresidential—is the single largest driver of electricity demand growth,” says Andrew Obin, who covers Vernova for BofA Securities. “Data center, the way you should think about it, it’s the straw that broke the camel’s back.”
Here’s an example of electrification: I replaced my home’s oil heating with a series of electric heat pumps and fluid loops that run deep underground. Now I pay nothing for oil, and a lot more for electricity, which comes from natural gas. It’s this kind of, um, progress that Vernova is riding.
This past week, Vernova management issued blowout guidance, and shares jumped 16% in a day. BofA’s Obin remains bullish, predicting 15% more upside. J.P. Morgan estimates that wind power accounts for less than 1% of Vernova’s value.