$470 and $1,350. These are two target prices for the same stock released within a single week in September. Curious about this gap myself, I calculated GE Vernova (GEV)'s 116 GW slot reservations and 243 trillion won backlog; my conclusion is a Sell, and the baseline 12-month target is $740. Let me explain why I took that view, step by step.
The figures are based on the US market close on September 17, 2026, and the KRW rate has been standardized to 1,384 KRW per dollar (as of September 16 in Seoul). All KRW amounts appearing in the text were calculated using this exchange rate.
- What kind of company is GE Vernova (GEV)?
- GE Vernova (GEV) Catalyst Recap — From Slots Sold Out to a 200 Trillion Won Backlog
- GE Vernova (GEV) Q2 Earnings and Two Guidance Upgrades
- GE Vernova (GEV) Valuation — How should we interpret the forward P/E of 41.5x?
- If you compare it side-by-side with competitors...
- GE Vernova (GEV) Target Price Scenarios and Expected Returns
- GE Vernova (GEV) Risks and Bear Triggers
- The part that bothered me the most
- Investment Opinion Conclusion — Good Company, High Price
- Frequently Asked Questions
- Reference materials
What kind of company is GE Vernova (GEV)?
Let me start with my conclusion in three sentences.
First, the 12-month baseline target price for GE Vernova (GEV) is $740 (approx. 1,024,160 KRW), the investment rating is Sell, and the confidence level is Low.
Second, the business is among the best I have seen this year. Orders in the second quarter increased by 881 TP3T compared to a year ago, and the order backlog—contract volume not yet recognized as revenue—has accumulated to $176 billion (approximately 243.58 trillion won).
Third, the reason I wrote "Sell" despite this is the price. The P/E (Price-to-Earnings Ratio, an indicator showing how many times the stock price is compared to one year's earnings) based on expected earnings over the next 12 months is 41.5 times, but the fair multiple I calculated is 34 times, so the expected return came out to minus 17.81 TP3T.
GE Vernova is a power equipment company that spun off from General Electric (GE) in April 2024. Its business is divided into three divisions: Power, which manufactures gas, nuclear, and hydroelectric power generation equipment; Wind, which produces wind turbines; and Electrification, which manufactures transmission and distribution equipment and transformers. It has approximately 78,000 employees and a market capitalization of $246.3 billion (approximately 340.93 trillion won).
Simply put, it is a structure where a single company sells both the "machines that generate" and the "machines that transport" electricity. As data centers expand, more power plants must be built and transmission lines laid, and both types of construction utilize this company's equipment. That is why their name is invariably mentioned whenever the topic of AI-related power shortages comes up.
GE Vernova (GEV) Catalyst Recap — From Slots Sold Out to a 200 Trillion Won Backlog
For this post, I focused on "events accumulated over the past two months" rather than immediately after the earnings announcement. The next earnings call is on October 28th, so there is still over a month left, and the news that moved the stock price during that time was mostly about orders, policies, and lawsuits. I have organized them in chronological order.
| Point of view | What happened? | Stock price reaction |
|---|---|---|
| 2026-04-22 | Q1 Earnings: Gas Equipment Backlog + Slot Reservations Surpass 100GW, First Annual Guidance Raised | — |
| 2026-07-22 | Q2 Earnings. Slots Expanded to 116GW, Revenue and Free Cash Flow Guidance Raised for the Second Time | Subsequently, the July high of $1,195.94 |
| 2026-09-14 | GLJ Research Opens Sell at $470 Target | — |
| 2026-09-16 | Morgan Stanley Presents "Backlog to Surpass $200 Billion by Early 2027" at Laguna Conference | Intraday +4.5% |
| 2026-09-16 | Vineyard Wind Offshore Wind Dispute Settlement | +2.3% |
| 2026-09-17 | BofA and Morgan Stanley maintain Buy at $1,310 and $1,350, respectively. | Closed at $924.93 |
The most important thing is slot reservation. This term might sound unfamiliar, but you can think of it as reserving at a popular restaurant. Since seats are limited, customers put down a deposit in advance to secure a spot for 2028. Currently, the kitchens at GE Vernova are virtually full for 2026 and 2027, with only about 10 GW remaining for 2029 and 2030 combined.
As of the end of June, the combined equipment backlog and slot reservations stand at 116 GW; calculated at an annual production rate of 20 GW, this represents approximately six years' worth of work. The company stated that it would increase this figure to over 125 GW by the end of the year, and CEO Straszig predicted that reservations would be fully booked for 2030 by the end of 2026. Production capacity is also being raised to 24 GW by 2028 and 30 GW by 2030.
The situation is similar in the power grid sector. The equipment backlog for the Electrification division stood at $40.6 billion (approximately 56.19 trillion won), an increase of 691% from a year ago, and the book-to-bill ratio in the second quarter was about 1.7. An order-to-revenue ratio of 1.7 times means that orders are accumulating faster than sales are being made. Data center-related orders alone have exceeded $5 billion (approximately 6.92 trillion won) this year, which is more than double the projected annual performance for 2025.
GE Vernova (GEV) Q2 Earnings and Two Guidance Upgrades
I also opened and read the original press release for the second quarter results released on July 22, and there was hardly anything to criticize. Revenue was $11.104 billion (approximately 15.37 trillion won), an increase of 221 TP3T from a year ago, and the organic growth rate, excluding the effects of mergers and acquisitions, was 121 TP3T. Orders received were $24.2 billion (approximately 33.49 trillion won), surging by 881 TP3T on an organic basis.
The extent of the improvement in profitability was even more impressive. The adjusted EBITDA margin rose to 11.31 TP3T, an increase of 3.41 TP3T points on an organic basis. This means that the cash equivalents remaining for every 100 won in sales increased from approximately 8 won to 11 won over the past year. Free cash flow in the second quarter was $5.106 billion (approximately 7.07 trillion won), which was greater than the total for the entire year of 2025. Free cash flow refers to the actual cash remaining after deducting capital expenditures from earnings.
Based on this trend, the company raised its 2026 guidance. Guidance refers to the company's own projections. Revenue was raised to $45.5 billion to $46.5 billion (approximately 62.97 trillion to 64.36 trillion won), and free cash flow to $11.5 billion to $12.5 billion (approximately 15.92 trillion to 17.3 trillion won). Particularly noteworthy was the nearly doubling of the cash flow forecast from the previous $6.5 billion to $7.5 billion.
However, there is one footnote I absolutely want to add here. A significant portion of this cash is not profit. Customer Advance PaymentThat is the point. Current deferred revenue at the end of June was $39.944 billion (approximately 55.28 trillion won), which is double the $19.603 billion (approximately 27.13 trillion won) from a year ago. It is a structure where money paid in advance by customers when placing slot reservations comes in as cash first. I also saw the same deferred revenue item yesterday when I was taking a look at Vertiv (VRT)'s financials., GE Vernova is much larger in scale, so its impact is correspondingly greater.
GE Vernova (GEV) Valuation — How should we interpret the forward P/E of 41.5x?
First, let's clear up the illusion. The trailing earnings per share (EPS) for GE Vernova shown on stock websites is $34.88. EPS is calculated by dividing net profit by the number of shares; in other words, it represents the earnings of a single share. However, this figure includes a $4.4 billion one-time accounting gain from the first-quarter acquisition of GE ProRec and a tax refund from the fourth quarter of last year. Since this isn't true performance, you shouldn't use it as is.
So, I used the adjusted EPS consensus, which removes one-time factors. The consensus is the average of analyst forecasts—in other words, market expectations. It is $15.21 (approx. 21,051 KRW) for 2026 and $25.31 (approx. 35,029 KRW) for 2027; when converted to a 12-month period starting now, it comes out to about $22.30 (approx. 30,863 KRW). If we divide the current price of $924.93 by this, 41.5 timesno see.
To determine whether this is expensive or cheap, a standard is needed. I combined two factors. One is the median of 28.3 times for competitors in the same power infrastructure sector, and the other is the multiple range GE Vernova has received since its IPO; generally, it fluctuated between 30 and 50 times, with a median around 38 times. Given that its listing history is only two and a half years—and that entire period was dominated by the AI power theme—I considered it risky to rely solely on its past multiples.
So, giving 60% to the competitor and 40% to your own resume. Optimal multiplier 34 timesWe set it at that level. It is 201 TP3T higher than the median of competitors, a result of acknowledging a premium based on six years' worth of work and a business structure that is effectively a three-company oligopoly. The current 41.5 times is 22.01 TP3T higher than this standard.
I also calculated it separately using Discounted Cash Flow (DCF). DCF is a method that calculates a company's future cash earnings at today's value and adds them up. I will disclose the assumptions as follows.
| home | 값 | reason |
|---|---|---|
| WACC (discount rate) | 8.5~10.5% | Beta 0.97, Net Cash $10.3 billion, Industrial Cost of Capital |
| End-of-life growth rate | 2.5~3.5% | Long-term GDP + Inflation, Growth in Electricity Demand Structure |
| forecast period | 7 years | Visibility of slot reservations continuing into the early 2030s |
| Structural FCF starting value | Base $3.9 billion / Bullish $4.4 billion / Bearish $3.2 billion | Adjusted net income minus the effect of advances received + Depreciation - Capital expenditure |
| Calculated value per share | Bearish $266 / Base $640 / Bullish $950 | — |
The DCF base price of $640 came out lower than the multiple method's $758. This is because measuring a company with rapidly improving margins using 7-year cash flow results in an initial undervaluation; therefore, I applied 701 TP 3T to the multiple method and 301 TP 3T to the DCF to the base price $740I caught it.
I also performed cross-validation. Assuming earnings per share of $45 in 2030 and a market leverage of 25x at that time, the stock price is $1,125. If discounted over four years at an annual rate of 101 TP3 T, today's value is $768. Since the price fell near my target price despite using a completely different method, I double-checked my calculations as well.
If you compare it side-by-side with competitors...
| event | The current price | 12-month forecast P/E | Recent sales growth rate | Operating profit margin |
|---|---|---|---|---|
| GE Vernova (GEV) | $924.93 | 41.5 times | +21.9% | 7.5% |
| ETN | $409.46 | 26.4 times | +21.4% | 16.6% |
| Quanta Service (PWR) | $616.54 | 32.5 times | +41.1% | 7.2% |
| Vertiv (VRT) | $241.49 | 28.3 times | +24.1% | 20.4% |
After creating the table, I could read the logic of the market. Investors are not buying the current operating profit margin of 7.51 TP3T; rather, they are buying in advance the double-digit profit margin projected for 2028. Since the company is actually on that path, it is not an unreasonable expectation. However, the fact that this expectation is already reflected in the stock price is what made me uncomfortable.
GE Vernova (GEV) Target Price Scenarios and Expected Returns
| scenario | Target price | Won | Compared to the current price | weight | Key assumptions |
|---|---|---|---|---|---|
| stress | $950 | 1,314,800 won | +2.7% | 30% | Achieved 12-month EPS of $24.5, maintaining a multiple of 40x |
| basic | $740 | 1,024,160 won | −20.0% | 45% | EPS normalizes to $22.3, multiple to 34x |
| Weakness | $570 | 788,880 won | −38.4% | 25% | EPS at $20.5 and multiple at 29x due to delayed margin improvement |
Let me explain why I set the weights at a base of 451 TP3T, a bullish 301 TP3T, and a bearish 251 TP3T. Usually, I set the base at 501 TP3T with 251 TP3T each for the bullish and bearish sides; however, since orders, policies, and production capacity expansion are all pointing in the same direction this time, I increased the bullish side by 51 TP3T points. On the other hand, given the high multiples, I kept the bearish side at 251 TP3T.
For reference, the Wall Street consensus target price is $1,236 (approximately ₩1,710,624), which is 671 TP3T higher than my figure. Out of 37 analysts, 30 are rated Buy, 7 are Neutral, and GLJ Research is the only firm recommending Sell. This is where I diverge from the market; I viewed the consensus as having essentially projected a 661 TP3T increase in earnings by 2027 and already factored in growth for 2028.
GE Vernova (GEV) Risks and Bear Triggers
1) Reversal of cash flow generated by advances → The moment the pace of order growth slows, the inflow of deferred revenue decreases, and free cash flow drops to the profit level. → The indicator to check is the increase in "current deferred revenue" on the balance sheet of the quarterly report. You can grasp the trend just by looking at how much it is increasing each quarter.
2) Risk that the pace of margin improvement will fall short of the consensus The 2027 EPS of $25.31 is a figure that is achieved only when the adjusted EBITDA margin rises to around 181 TP3T, but it is currently in the 12–141 TP3T range. → You can check the segment-by-segment EBITDA margins in the quarterly earnings press release, particularly whether Power's target of 17–191 TP3T has been met.
3) Deficit in the wind power business → The Wind segment is expected to incur a segment loss of approximately $400 million (about 553.6 billion KRW) again this year. The structure of eating into overall profits continues. → Check every quarter to see if the Wind segment EBITDA narrows the deficit.
4) Reversal of data center demand itself A significant portion of gas turbine slots are relying on demand from AI data centers. Operators that have expanded capacity through debt, like Coreweave (CRWV)나 Rental business operators like Applied Digital (APLD)If financing is blocked, orders may be delayed → You need to look at announcements regarding the cancellation or postponement of slot reservations together with hyperscaler facility investment guidance.
The bearish triggers I see are clear. If the year-end target of 125GW for gas equipment is not met, or if Power segment margins fall below 171TP in the Q3 earnings on October 28, the "margin story" will waver. At that moment, the 41.5x multiple loses its basis for defense.
The part that bothered me the most
I stopped at a single line while reading the Q2 press release: "Free cash flow of $5.1 billion, more than the entire year of 2025." Usually, people would just marvel at that and move on, but I opened the balance sheet for the same quarter to first check how much deferred revenue had increased. It turned out that changes in working capital accounted for most of the operating cash flow. This does not mean that the cash is fake at all. However, since this is "cash generated by orders" rather than "cash generated by profits," its nature is completely different.
One more thing. I kept seeing the memory of GE Power entering a long slump in the early 2010s after the gas turbine boom overlapping with this. Of course, things are different now. Back then, it was the utility ordering cycle, whereas now a new demand base of data centers has emerged. Still, offering a multiple of over 40 times based on six years' worth of work is essentially valuing demand from the mid-2030s based on today's perspective, so I decided to trust it only halfway.
Investment Opinion Conclusion — Good Company, High Price
There are three reasons why I viewed this as a Sell. First, the 12-month earnings multiple of 41.5 times is 221 TP3T higher than the fair value of 34 times that I calculated. Second, the weighted average of the three scenarios yields an expected return of -17.81 TP3T, which is significantly below my selling threshold of -81 TP3T. Third, the three different methods—the multiple method, DCF, and 2030 retrograde—all indicated a range of $640 to $768.
The important thing is this The point that this was not a decision made because the business was deteriorating.That is the case. Orders, margins, and cash are all improving. Since this conclusion was reached purely based on price, I rated the confidence level as Low. It is common in the market for momentum to outperform valuation for about another year.
To summarize from a practical standpoint: If you haven't bought yet, I wouldn't choose to enter at the 41.5x level. If you already hold the stock, I believe it is more rational to reassess your position after verifying power margins and progress toward the year-end 125GW target in the Q3 earnings report on October 28. There are also clear points where my thinking will prove wrong. If year-end gas contracts comfortably exceed 125GW and the margin trajectory for 2027 is brought forward, I will have to raise my baseline target price.
Frequently Asked Questions
What is the target price for GE Vernova (GEV)?
My 12-month baseline target price is $740 (approximately 1,024,160 KRW). I set the bullish scenario at $950 and the bearish scenario at $570. The average Wall Street consensus is $1,236, so there is a significant difference from my estimate.
Performance is good and orders have increased, so why did the stock price fall?
It is not because earnings were poor, but because expectations were too high. The July high of $1,195.94 was at a level exceeding 50 times 12-month earnings forecasts. The fact that the stock price has dropped by 22.71 TP3T despite a continuous stream of good news can be seen as a signal that the market is self-adjusting its multiples.
If the gas turbine slots are sold out, isn't that always a good thing?
In terms of business visibility, it is certainly good. However, since a sell-out implies that "revenue for the next six years is fixed," it actually becomes more difficult to generate surprise growth by increasing volume in the short term. From this point on, I believe that margins, not volume, are what drive the stock price.
They say free cash flow is higher than in 2025; is that really a good sign?
You should consider that to be only half right. A significant portion of the $5.106 billion in free cash flow in the second quarter came from advance deposits paid by customers. The fact that deferred current revenue doubled from $19.6 billion to $39.9 billion in just one year serves as evidence. This effect will disappear if the growth in orders slows down.
When is the next earnings announcement, and what should I be watching?
It is scheduled for October 28, 2026. I plan to look at three things: whether the Power segment EBITDA margin falls within the 17–191 TP3T target, how far gas equipment contracts have progressed toward 125 GW, and whether the increase in deferred revenue is maintained.
Reference materials
- SEC EDGAR — GE Vernova Q2 2026 Earnings 8-K Original Text
- GE Vernova IR — Q2 Earnings and 2026 Guidance Upgrade Press Release
- Turbomachinery Magazine — Reports Gas Turbine Backlog Reaches 116GW
- StockAnalysis — GEV Analyst Consensus and Earnings Forecasts
During the writing process, I gathered data and created a draft using AI research tools, and then personally verified the numbers and logic one by one before publication. Stock price, exchange rate, and earnings estimates are based on the time of writing and are subject to change. This article is intended for informational purposes only and is not a recommendation to buy or sell any specific stock. Please remember that investment decisions and their consequences are solely the responsibility of the investor.