GE Vernova (GEV 2.53%) shares popped higher by 5.3% as of 3:30 p.m. today. The move comes as the investment thesis for AI infrastructure stocks was strengthened by reports coming from companies with heavy exposure to data center spending.
GE Vernova and the AI infrastructure market
As readers already know, GE Vernova's gas turbine equipment demand is booming, and its backlog is growing so high (up to $150 billion at the end of the year) that the company can sign up customers on slot reservation agreements (SRAs) whereby data center customers are willing to pay upfront to secure production slots for future gas turbines to power data centers. It's an indication of just how thirsty hyperscalers are for power for data centers that service AI-application growth.
As such, when two high-profile companies (both with earlier-cycle sales than GE Vernova) report excellent updates, it's understandable that GE Vernova stock pops in sympathy.
NYSE: GEV
Key Data Points
Vertiv and Aehr Test Systems
Vertiv's power and cooling solutions tend to be early cycle as they help build the physical infrastructure that provides the backbone to a data center. The company released its fourth-quarter earnings report today and announced a book-to-bill ratio of 2.9 times, and management forecast organic sales growth of 27% to 29% in 2026.
Image source: Getty Images.
Aehr Test Systems makes test equipment for the semiconductor market, and in this case, for AI processors used in data centers. When semiconductor companies want to start testing the quality and reliability of the chips they are making, they order from Aehr. The good news today is that its lead customer has placed an initial order for test equipment for its "next-generation, significantly higher-power AI processor used in data center training and inference applications."
It's an indication of ongoing demand, and, just as with Vertiv's orders, its orders tend to be relatively early cycle when compared with GE Vernova. As such, investors are penciling in demand for GE Vernova's gas turbine equipment down the line, which is typically installed to complete the data center.
