GE Vernova's stock fell 9% after its second-quarter earnings, even though revenue rose 22% and its backlog grew to $176 billion. Profit and EBITDA both fell short of analyst estimates, the wind-power division's losses widened, and management flagged new tariff costs. Even so, most analysts still rate the stock a buy, with a price target more than 20% above where it trades now.
GE Vernova shares tumbled 9% after the company's second-quarter earnings release. Revenue for the quarter grew 22% year over year to $11.1 billion, above the $10.8 billion Wall Street expected.
Earnings miss overshadows the revenue growth
Adjusted per-share profit rose to $2.47 from $1.86 a year earlier, but missed the $3.18 analysts had forecast. Quarterly EBITDA of $1.25 billion also came up short of the $1.28 billion Wall Street had projected.
The wind-power division added to the pressure: its negative EBITDA widened to a loss of $275 million as revenue fell 10% and orders dropped 39%. Management also warned that tariffs would add roughly $100 million to $200 million to this year's costs.
Valuation left little room for error
Heading into the report, shares traded at roughly 35 times this year's projected earnings of $30.76, a valuation that left little room for anything short of a clean quarter. Some of the drop may have had less to do with the results themselves: profit-taking pressure was arguably still in place following the stock's huge run-up earlier this year, and broader market volatility added to the strain as well.
AI power demand keeps the backlog growing
That growth is coming largely from GE Vernova's natural gas power turbines, originally built for utility companies but increasingly ordered by artificial intelligence data center operators taking power production into their own hands. PwC expects U.S. data-center-driven demand for natural gas to more than quintuple between 2025 and 2035.
Wall Street still bullish despite the sell-off
The company's backlog grew by $13 billion to $176 billion during the quarter. That prompted it to raise its full-year guidance from a range of $45.5 billion to $46.5 billion to a revised range of $44.5 billion to $45.5 billion.
Wall Street's 12-month consensus price target stands at $1,238.78, more than 20% above the stock's current price, with most analysts rating GEV a strong buy. Much of the post-earnings pullback has already reversed.
Source: Fool
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