Haverhill Financial Research · October 26, 2026
Summary: Haverhill price target $940 (12 months)
GE Vernova builds the machines that turn fuel into electricity and the equipment that moves it to where it is used. That has become a scarce thing to be good at. Gas equipment under contract — firm backlog plus paid slot reservations — rose from 50 gigawatts in early 2025 to 116 gigawatts by the middle of 2026. Total backlog reached $176 billion. Second-quarter orders were $24.2 billion, up 88% organically, and free cash flow for the first half was $9.9 billion. The shares have nonetheless fallen about 30% from their June high, including 11.5% in the week to October 23, largely on sentiment about how long data-centre electricity demand lasts. At $815.00 our 12-month price target of $940 is about 15% above the current price, so we rate the shares Buy. Third-quarter results arrive before the market opens on Wednesday, October 28.
The queue is years deep. Reservations extend four to five years out, and the company expects to be more than half contracted for 2031 deliveries by the end of this year.
Pricing is going the right way. Management said new orders in the first half of 2026 were priced 10 to 20 points higher per kilowatt than in the fourth quarter of 2025.
Our view: the selloff is about a mix shift in one segment's order book, not about the order book shrinking. That looks like a price dislocation rather than a thesis break.
Investment thesis in brief
Our thesis: electricity demand is growing for the first time in two decades and the equipment to meet it cannot be built quickly, which hands GE Vernova pricing power it has never had. The market is currently pricing the most volatile part of that demand as though it were the whole of it.
What we like. Three-year lead times on heavy-duty turbines mean the capacity to supply this cycle is already spoken for, and GE Vernova is one of three companies in the world that can supply it at scale. Slot reservations come with meaningful deposits, so customers are paying to hold their place. Margins are rising as the backlog turns over into better-priced work: Power reached an 18.8% EBITDA margin in the second quarter, up 240 basis points, and Electrification 18.4%, up 390.
What the market may be missing. The customer base is less fashionable than the narrative suggests. Management has said roughly 80% of gas contracting comes from utilities, independent power producers and industrial customers, and only about 20% from data centres. The demand underneath this is electrification, industrial load and the replacement of retiring coal plants — slower-moving buyers with regulated economics, not hyperscaler capital budgets.
What holds us back. Two things. The first-half free cash flow of $9.9 billion against full-year guidance of $11.5 to $12.5 billion implies only $1.6 to $2.6 billion in the second half, which tells you how much of that cash was customer deposits arriving early. The second is Wind: a $275 million segment loss in the second quarter against a full-year plan of about $400 million, which requires a sharp improvement that has not yet appeared.
How does the business actually make money?
Three segments, with very different economics.
Power ($5.5 billion of second-quarter revenue, up 14%). Gas turbines, plus nuclear and hydro. Segment EBITDA margin 18.8%. Equipment sales drag decades of higher-margin service contracts behind them, which is the real prize.
Electrification ($3.6 billion, up 68%). Grid equipment: transformers, switchgear, high-voltage transmission. Orders of $6.3 billion gave a book-to-bill around 1.7, and the equipment backlog reached $40.6 billion, up 69%.
Wind ($2.0 billion, down 10%). Onshore and offshore turbines. Orders fell 40% organically and the segment lost $275 million at the EBITDA line. This is the part that does not work yet.
How to read a slot reservation. This is the term that matters most and is least understood. A slot reservation is a paid agreement holding a place in the manufacturing queue — reportedly with deposits of around 25% — before a firm order is signed. It is a stronger signal than a sales pipeline and weaker than backlog. Of the 116 gigawatts under contract at mid-year, 53 were firm equipment backlog and 63 were reservations. Our chart separates them deliberately.
What do the numbers say?
Second-quarter revenue was $11.1 billion, up 22% reported and 12% organically. Adjusted EBITDA was $1.25 billion at an 11.3% margin. Net income was $649 million and diluted earnings $2.47 a share. Free cash flow was $5.1 billion in the quarter. Management raised full-year guidance to $45.5 to $46.5 billion of revenue and $11.5 to $12.5 billion of free cash flow.
Three things investors should know.
Reported earnings are not a clean base. The 2026 figures include a $4.5 billion pre-tax gain on the Prolec GE transaction in the first quarter, and 2025 included a $2.9 billion tax valuation allowance release. Use adjusted EBITDA and the company's 2028 framework, not the headline price-to-earnings ratio.
Capacity is the constraint being solved. Gas turbine output is moving from about 20 gigawatts a year now to a targeted 24 by 2028 and 30 by 2030. Heavy-duty HA-class orders went from 15 units in the first half of 2025 to 27 in the first half of 2026.
The 2028 plan is specific. $56 billion of revenue, a 20% adjusted EBITDA margin, and at least $24 billion of cumulative free cash flow from 2025 to 2028. Management raised the revenue element from $52 billion in January.
Competition and moat
There are very few companies that can build a heavy-duty gas turbine, and that is most of the story.
Who it competes with. Siemens Energy and Mitsubishi Power are the other two credible suppliers of large gas turbines. In grid equipment the field is wider — Hitachi Energy, Schneider, Eaton and Siemens all compete — but all of them are capacity-constrained at the same moment, which is why transformer lead times have stretched and prices have risen.
Where the moat is real. A gas turbine order is the start of a thirty-year relationship, because the installed base needs parts and servicing that only the manufacturer can supply well. That is why the installed-base figure matters: 130 HA machines running and 195 on contract, with a target of at least 400 running or contracted by the end of 2027. Service revenue is higher margin and far less cyclical than equipment.
Where it is thin. Wind. The segment has lost money through offshore project costs, orders fell 40% organically in the second quarter, and the Vineyard Wind dispute over a 2024 blade failure remains unresolved with substantial payments withheld. Management expects roughly a $400 million full-year loss; the first half alone ran well above half that.
What is it worth?
We value GE Vernova at $940 per share over the next 12 months, to October 2027, as a probability-weighted blend of three cases. That is about 15% above today's price, which supports a Buy.
Our method. Because reported earnings carry large one-off items, we work from the company's own 2028 framework. By October 2027 investors will be looking at 2028. We take revenue and an EBITDA margin for that year, deduct depreciation and tax to reach an approximate earnings per share on roughly 255 million shares after buybacks, apply a multiple, and weight the cases 25% bear, 50% base, 25% bull.
Why these numbers. The base case is simply the company delivering the plan it has published, on a multiple of 32 times — reasonable for a business with multi-year contracted visibility and a rising service annuity, and well below where the shares traded in June. The bear case assumes reservations convert poorly and margins stall two points below plan. Note that the bear case is not a collapse in demand; it is demand arriving later and at worse prices.
What the price implies. At $815.00 the market capitalisation is about $217 billion against roughly $9 billion of net cash. On our base-case 2028 earnings that is about 26 times — for a company whose order book has doubled in a year. The market is currently applying a cyclical multiple to what looks like a structural shift.
What are the real risks?
Reservations are not orders. Of 116 gigawatts under contract, 63 are reservations that can be delayed, repriced or cancelled. Deposits reduce that risk; they do not remove it.
The data-centre mix is lumpy. Management said in September that data centres would be about 20% of Electrification orders in the third and fourth quarters, down from almost 40% in the first half. That comment is the proximate cause of the October selloff.
The second-half cash cliff. Guidance implies only $1.6 to $2.6 billion of free cash flow in the second half against $9.9 billion in the first. Deposit-driven cash reverses if projects stall.
Wind. A $275 million quarterly loss against a $400 million full-year plan, with the Vineyard Wind dispute unresolved.
Execution on capacity. Going from 20 to 30 gigawatts of annual output by 2030 is a manufacturing problem that has not been solved yet.
Policy and tariffs. Section 232 guidance is pending, and the company has previously flagged tariff costs of up to around $400 million.
What would change our mind?
Our Buy rests on one idea: a multi-year contracted order book is being valued as a one-year cyclical story.
Signals that would strengthen the case
Gas under contract above 125 gigawatts by the end of 2026, which is the company's own target.
Total backlog passing $200 billion in early 2027.
Wind losses inside the $400 million full-year plan.
Another disclosed step up in pricing per kilowatt on new slots.
Signals that would move us to Hold or Sell
Gas under contract flat or lower in any quarter, which would mean reservations are being cancelled rather than converted.
Full-year free cash flow guidance cut, which would confirm the deposit-timing concern.
Electrification orders falling year over year, not merely shifting in mix.
The price runs above about $1,080 with no change in our earnings view.
Catalysts to watch
Wednesday, October 28, 2026, before the market opens: third-quarter results, with a webcast at 7:30am Eastern. The numbers that matter are gigawatts under contract against the 125 target, Electrification orders and their data-centre mix, and any change to full-year cash flow guidance.
Year-end 2026: at least 125 gigawatts of gas under contract, and more than half of 2031 delivery slots contracted.
Late January 2027: fourth-quarter results, initial 2027 guidance, and the backlog crossing $200 billion.
2027: the Ontario Power Generation licence-to-operate decision at Darlington, and construction start at the Tennessee Valley Authority's Clinch River site following the first US construction permit for a BWRX-300 small modular reactor in September 2026.
Sources and disclosures
Every company figure in this report comes from GE Vernova's own filings and releases, linked below. The analysis, model and price target are Haverhill Financial Research's own work.
Disclosures. Haverhill Financial Research is a publisher of general financial commentary. This report is not personalized investment advice and does not consider any reader's financial situation; readers should do their own research. Price targets are estimates of value, not guarantees. Haverhill ratings follow our published bands: Buy when our 12-month target is at least 15% above the price, Sell when it is at least 15% below, Hold in between. The author of this post does not hold a position in GE Vernova. Price data as of the New York Stock Exchange close on October 23, 2026.
