GE Vernova: Taking a Closer Look at 2028 Power Segment Earnings Power

Key Morningstar Metrics for GE Vernova

• Fair Value Estimate: $420.00
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: High

GE Vernova GEV shares continue to be one of the biggest beneficiaries of rising artificial intelligence power demand, with shares up approximately 90% in the year to date.

Why it matters: A resurgence in the company’s gas power business is central to investor optimism. We expect power segment revenue, which includes gas power, to grow at a 14.0% CAGR through 2028 as EBITDA margins expand to over 18.0% from 12.5% in 2024.

• The previously announced capacity expansion in the second half of 2026 should support 20 gigawatts of annual shipments, which, along with healthy price increases, drives our segment revenue outlook.
• Expanding margins on higher-priced original equipment represent the biggest medium-term margin driver, but we see growing margins within its service business as well, most notably in the firm’s transactional business.

The bottom line: We are increasing our fair value estimate for narrow-moat GE Vernova to $420 per share from $390 after updating our expectations for the company’s power and electrification segments.

• GE Vernova remains well-positioned to capitalize on growing electricity demand, but we think its current valuation adequately reflects future revenue growth and margin expansion.
• We believe our revised estimates are in line with or above the consensus through 2028. Thus, the bulk of our valuation difference versus the market price is likely attributable to the implied multiple beyond 2029, where we expect the pace of margin expansion to slow.

Big picture: The central question for GE Vernova remains the duration of the upcycle in the gas power and electrification businesses.

• We remain hesitant to ascribe the margin levels needed to justify the current valuation of shares, given the inherent cyclicality in its business.
• Nonetheless, we acknowledge that the potential upside includes further gas power capacity increases beyond the 20 gigawatts we assume, as well as further price increases on original equipment above the $2,300 ascribed in our long-term model.