Since spinning off from General Electric (now operating as GE Aerospace), GE Vernova (GEV -3.02%) has gone on an absolute tear, with the stock surging 373% since going public in early 2023. The company is well positioned as a utility provider to meet the growing energy demand, which will be driven by artificial intelligence (AI) and the power-hungry data centers that support them.
GE Vernova has a large backlog of orders and a substantial portfolio of energy assets. However, the stock has increased significantly, and it trades at a lofty valuation. If you are considering scooping up shares of GE Vernova, here's what you should consider first.
GE Vernova is a major energy provider
GE Vernova operates as an independent energy technology company, following its spin-off from General Electric Company in April 2024. The company specializes in designing, manufacturing, and servicing solutions for power generation, grid infrastructure, and renewable energy.
Its strength lies in its massive portfolio of energy assets, including gas and steam turbines, electrification systems, wind turbines, hydroelectric power, hybrid power, grid management technology, and small modular reactors. It has an expansive global presence across 95 countries, and its installed base generates approximately 25% of the world's electricity.
GE Vernova has hit the ground running since its initial public offering. The company was profitable last year, earning a net income of $1.6 billion on total revenue of $36.6 billion. Through six months of this year, the company has earned $756 million in income on $17.1 billion in revenue. Recent earnings results were well received, and the stock surged nearly 15% following its announcement.
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Strong demand is driving a robust order book
GE Vernova's results have been solid, but it's the future growth that has investors rushing to buy the stock. As of June 30, its backlog (as measured by remaining performance obligation) was $128.7 billion, a 11% increase year over year.
Demand for its services has been robust. In the second quarter, the company signed 9 gigawatts (GW) of net gas equipment contracts, bringing its total backlog and slot reservation agreements to 55 GW, up from 50 GW reported in April.
In addition, gas turbine capacity is effectively sold out through 2028, and many orders have been booked into 2029, with discussions underway for slot reservations into 2030. Analysts at the Bank of Montreal forecast long-term service contract revenue will more than double by 2035, projecting margin expansion from gas and grid businesses, which will underpin recurring profits beyond initial equipment sales.
CFO Ken Parks also noted that "much of that backlog is yet to be delivered. So as we think about the future, there is already margin in backlog to be delivered as we move out into the 2026, 2027, 2028 time frame."
Keep an eye on its valuation and other potential risks
Despite strong Q2 2025 financials and a robust backlog, GE Vernova faces growing skepticism rooted in valuation, execution risk, and policy uncertainty. Today, GE Vernova trades at a valuation of 85 times this year's projected earnings and 50.5 times next year's projected earnings.
Wolfe Research and Jefferies warn of vastly overextended expectations already being priced in. Wolfe downgraded it to "peer perform," stating that "many of the positives are now adequately discounted" as its current valuation.
Some risks could weigh on the stock. For example, its offshore wind segment is under pressure after blade failures halted some of its projects. As a result, GE Vernova recorded contractual losses of about $900 million last year to remediate those issues and remove previously installed blades.
Meanwhile, tariffs pose margin compression risks even as guidance is maintained. The company estimates those costs to be between $300 million and $400 million due to global tariffs. While demand drivers like AI-driven electrification remain intact, they continue to hinge on massive growth.
Is GE Vernova a buy?
GE Vernova trades at a premium valuation. This lofty valuation reflects its significant order book and early-mover advantage in the electrification and renewable energy story.
Still, its valuation leaves the stock more vulnerable to downside risks with a limited margin of safety. While it is a compelling stock attractively positioned to capitalize on rising energy demand, I'd like to see a more affordable price tag before buying this stock.
