Have you ever watched a stock you own absolutely rocket higher and still felt like the market was only just beginning to understand the story?
That’s exactly what happened this week with GE Vernova. Shares surged more than 14% in a single session, touching fresh all-time highs, after the company dropped guidance that can only be described as jaw-dropping. And honestly? It felt overdue.
I’ve been following the energy transition space for years, and rarely have I seen a management team lay out such a clear, believable path to doubling revenue and quadrupling margins over the next few years. This wasn’t some vague “we’re excited about the future presentation. This was specific, aggressive, and backed by numbers that crushed even the most bullish expectations.
The Moment Everything Clicked for Investors
Sometimes a stock trades for months—or even years—waiting for the world to catch up. GE Vernova, spun out less than two years ago, has been one of those names. Strong quarters, growing backlog, clear tailwinds from AI power demand… yet the multiple stayed reasonable. Until now.
Tuesday evening’s investor day changed everything. Management didn’t just update guidance—they essentially rewrote the long-term story in bold, permanent marker.
We have a lot of margin expansion into the next decade. It’s a healthy mix of price, volume, and productivity.
CEO Scott Strazik
When the CEO starts talking about robotics and AI driving productivity gains in a heavy industrial business, you know something special is happening.
Breaking Down the New 2028 Targets
Let me put this in perspective. The prior long-term outlook—already considered ambitious—called for about $45 billion in revenue by 2028 with 14% EBITDA margins. The new numbers?
- Revenue: $52 billion (up from $45 billion prior)
- Adjusted EBITDA margin: 20% (up from 14%)
- Cumulative free cash flow 2025-2028: >$22 billion (up from $8 billion+)
- Total backlog: >$200 billion by 2028 (from $135 billion today)
That’s not an update. That’s a complete re-rating event.
Perhaps most impressive? They’re achieving this while navigating what many assumed would be peak years for gas turbine orders. Instead, demand—particularly from hyperscale data center customers—appears to be accelerating.
Why Gas Turbines Are the Hidden Hero of the AI Boom
Everyone talks about chips, GPUs, and data center construction. But someone has to actually power these facilities. And when you’re building AI training clusters that consume gigawatts of electricity, renewables alone won’t cut it—you need reliable, dispatchable power.
Enter natural gas combined-cycle plants. They’re efficient, relatively quick to build, and can ramp up or down as needed to complement intermittent solar and wind. For tech giants making multi-decade AI infrastructure bets, gas turbines aren’t optional—they’re essential.
In my view, this is the most underappreciated angle of the entire AI investment thesis. The power bottleneck is real, and GE Vernova sits squarely in the middle of solving it.
Near-Term Guidance Was Strong Too
While the 2028 numbers stole the show, the 2025 and 2026 outlook actually provided crucial credibility.
For 2025, they’re now trending toward the high end of $36-37 billion revenue guidance, reaffirmed 8-9% EBITDA margins, but dramatically raised free cash flow expectations to $3.5-4.0 billion (from $3.0-3.5 billion).
Then 2026 brings another step function: $41-42 billion revenue and—most importantly—free cash flow jumping to $4.5-5.0 billion. That kind of FCF generation at this stage of growth is extraordinary.
| Year | Revenue Guidance | EBITDA Margin | Free Cash Flow |
| 2025 | $36-37B (high end) | 8-9% | $3.5-4.0B |
| 2026 | $41-42B | 11-13% | $4.5-5.0B |
| 2028 | ~$52B | ~20% | >$22B cumulative |
When you can see this kind of visibility three years out in a cyclical industry, something structural is happening.
The Margin Story Might Be Even Better Than Revenue
Revenue growth gets the headlines, but margin expansion is where real shareholder value gets created. Going from mid-single-digit margins to 20% over five years would be remarkable in any industry. In heavy equipment manufacturing? It’s almost unprecedented.
Management highlighted three drivers: price, volume, and productivity. The productivity piece particularly caught my attention—investments in robotics and AI for service operations could create a lasting competitive moat.
Think about it: a turbine installed today will need servicing for 25-30 years. If you can perform that service faster, cheaper, and with higher uptime using advanced tech, you win the long game. This isn’t just cyclical pricing power—it’s structural advantage.
Valuation: Expensive or Actually Reasonable?
After this move, shares trade around 45x 2025 earnings estimates. That sounds rich until you layer in the growth trajectory.
By 2028, using the new $52 billion revenue and 20% margins, you’re looking at roughly $10.4 billion in EBITDA. Apply a conservative 18x multiple (below many industrial peers with far worse growth) and you get ~$187 billion enterprise value. Divide by today’s ~330 million shares and you’re well north of $500 per share from 2028 earnings alone.
Now add $22 billion in cumulative free cash flow through 2028, minimal debt, and continued growth into the 2030s that management explicitly teased… suddenly today’s price doesn’t look so crazy.
We’re raising our price target to $800 to reflect this dramatically improved outlook while maintaining our strong conviction rating.
Risks? Of Course—But Manageable
No investment is without risks. Supply chain constraints could delay deliveries. Policy changes around natural gas or renewables could shift timelines. Execution risk always matters in turnarounds.
But here’s what gives me confidence: the backlog is already $135 billion and growing. Customer commitments from the world’s largest tech companies carry real weight. And the margin progression has been steady and credible since spin-off.
In investing, you pay premiums for visibility. GE Vernova just delivered more visibility than almost any industrial company I follow.
The Bottom Line
GE Vernova isn’t just riding the energy transition wave—they’re helping build the infrastructure that makes it possible. From AI data centers to grid modernization to emerging market electrification, their equipment will be generating power for decades.
The stock has more than tripled since the spin-off, more than doubled this year alone, and just hit all-time highs. Yet after this week’s presentation, I can’t shake the feeling that we’re still in the early innings.
If you’re a long-term growth investor comfortable with industrial cyclicality, this remains one of the most compelling stories in the market. The numbers speak for themselves—and they’re only getting better.
Disclosure: The author holds a long position in GE Vernova shares.
