Two years after its spinoff from General Electric, GE Vernova (NYSE: GEV) has become a key player in the artificial intelligence buildout.
It doesn’t make chips or software. The giant industrial company makes the turbines, grid equipment, and nuclear technology that help keep AI data centers running.
Today, this nearly $270 billion company is showing up on lists of growth names to watch. Up about 55% this year, its stock still has some room to run, analysts believe.
But while its latest earnings showed the strength of its business, there were some soft spots reported that are worth watching. Investors might want to know the full story rather than simply following the top numbers and mentions of AI.
Strong Revenue Growth Builds a Record Backlog
GE Vernova reported second-quarter 2026 results on July 22, showing strong growth at the top line, but weaker toward the bottom.
Revenue rose 22% year-over-year (YOY) to $11.1 billion, comfortably ahead of Wall Street's consensus estimate of $10.79 billion. Orders more than doubled, surging 88% organically to $24.2 billion. That pushed the company's total backlog to $176 billion, up $13 billion in just three months, with management targeting $200 billion in 2027.
In other words, the outlook looks strong as the backlog represents years of future revenue already under contract. In particular, gas turbine capacity booked for slot reservations climbed from 100 gigawatts to 116 gigawatts in the quarter, with management now expecting to reach at least 125 gigawatts by year-end.
Profitability Falls Short of Expectations
Then came the numbers further down the P&L. Adjusted earnings per share came in well below the roughly $3.17 analysts had modeled, even as net income still rose to $649 million, or $2.47 per diluted share, from $492 million, or $1.86 per share, a year earlier.
Adjusted EBITDA grew 62% YOY to $1.25 billion, with margin expanding 340 basis points organically to 11.2%. That was apparently below what Wall Street expected, as equipment revenue in electrification and power is growing faster than the more profitable services business right now.
The power segment reported orders of $16.7 billion increased 134% organically, while revenue of $5.5 billion was an increase of 14%, led by the gas power equipment sector. Electrification orders increased 66% organically to $6.3 billion.
Wind orders, however, dropped 40% organically to just $1.2 billion.
In other words, GE Vernova is growing faster than expected but converting that growth into profit more slowly than expected.
Cash Flow Provides a Major Bright Spot
What was impressive was the quarter's cash. Free cash flow hit $5.1 billion in the quarter alone, up $4.9 billion, and more than all of 2025's total. This was driven largely by customers making bigger upfront payments to reserve turbine slots.
That cash pile helped push the cash balance sheet to $13.1 billion, up $4.3 billion in the year. Management has already returned $3.9 billion to shareholders this year through buybacks and a 50-cent quarterly dividend, which today yields just 0.2%.
Buoyed by that cash generation, management also raised full-year revenue guidance to a range of $45.5 billion to $46.5 billion and lifted free cash flow guidance to $11.5 billion to $12.5 billion.
Wind Losses and Valuation Create Risks
Those big numbers, however, do not erase the problems. As noted, the first is wind. The segment's revenue of $2 billion represented a decline of 11% organically in the quarter, and it posted an EBITDA loss of roughly $275 million.
That’s part of an expected full-year loss of nearly $400 million as weak U.S. onshore demand, permitting delays, and tariffs continue to weigh on the business. Management has guided to a net tariff impact of $250 million to $350 million for 2026 across the whole company, a cost included in the guidance but still a painful hit to margins.
The second issue is valuation. At a trailing price-to-earnings ratio near 30, GEV trades well above levels that value investors favor, and that premium might be hard to maintain if this type of quarter repeats.
Competition also exists. GE Vernova sits at the center of the AI power story alongside NuScale Power (NYSE: SMR) in nuclear, traditional rivals Siemens Energy and Vestas Wind Systems battling for global turbine share, and Eaton (NYSE: ETN), which competes in the electrification and grid equipment space that is one of GE Vernova's fastest-growing segments.
Analysts Remain Bullish on GE Vernova
Even with the risks, GE Vernova is a powerhouse that has analysts taking a positive view. The stock carries a consensus rating of Moderate Buy from 30 analysts, split among two Strong Buy ratings, 22 Buy ratings, five Holds, and only one Sell.
The average 12-month price target set by analysts is $1,133.15, implying roughly 10% upside from current levels at about $1,042. The high target is $1,450 while the lowest is set at $580, clearly indicating there might be more to the story.
Growth Potential Comes at a Premium
Overall, GE Vernova remains one of the more legitimate ways to invest in the electricity demands of artificial intelligence. Backed by a record backlog, the company’s orders are surging, and cash flow is accelerating.
But this is not a value stock trading at a discount. It is premium priced and just showed investors it can still stumble on profitability.
Investors should understand that wind losses, tariff costs, and a rich valuation leave little room for error. Revenue growth is likely coming, but the rest remains to be seen.