GE Vernova Accelerates Growth Amid Electricity Sector Boom

GE Vernova Reports Strong Q2 Growth Amid Strategic Realignment

GE Vernova Inc. (NYSE: GEV) demonstrated significant financial strength in the second quarter of 2025, reporting an 11% increase in revenue. This growth was accompanied by a pivotal strategic decision to divest its Proficy manufacturing software business, a move aimed at enhancing focus on core electrification and decarbonization solutions. The company's performance and forward-looking strategy have resonated positively across the market, drawing endorsements from prominent financial commentators and leading to adjusted price targets from analysts.

Second Quarter Performance Highlights and Strategic Moves

For the period ending June 30, 2025, GE Vernova reported total revenues of $9.111 billion, an 11% increase compared to $8.204 billion in Q2 2024. This growth was bolstered by a sequential increase of $5.2 billion in backlog during the quarter. Despite the revenue surge, net income for Q2 2025 was $492 million, a decline from $1.280 billion in Q2 2024, resulting in Basic Earnings Per Share (EPS) of $1.89 compared to $4.72 in the prior year. This decrease was primarily attributed to increased cost of sales across equipment and services, leading to tighter margins, and higher research and development expenses, which rose to $282 million from $237 million year-over-year.

In a key strategic development, GE Vernova announced a binding agreement to sell its Proficy manufacturing software business to TPG for $600 million. This divestiture, expected to close in the first half of 2026, will allow GE Vernova to reinvest the proceeds into its core GridOS enterprise software and AI platform for grid orchestration, underscoring a concentrated effort on energy-related applications. As CEO Scott Strazik articulated, "Procter & Gamble is a great customer but that's not our core business," highlighting the strategic rationale behind shedding non-core assets to focus on the burgeoning energy transition market.

Further fueling market optimism, financial commentator Jim Cramer publicly endorsed GEV stock, emphasizing its unique position to meet the escalating power demands of AI data centers.

Market Response and Underlying Catalysts

The market's bullish sentiment towards GE Vernova is underpinned by several powerful catalysts. The strategic divestiture of Proficy is seen as a move to streamline operations and dedicate resources to high-growth areas within electrification and decarbonization. This realignment positions GE Vernova favorably to capture opportunities within the rapidly expanding AI-driven energy infrastructure market.

Demand for power from AI data centers is surging, with the largest facilities requiring up to 5 gigawatts (GW) of electricity, equivalent to the needs of five million homes. GE Vernova is directly addressing this demand; its power segment experienced a 44% organic increase in orders for gas turbines linked to the AI boom in Q2 2025. Concurrently, its electrification business grew 20% year-over-year, securing nearly $500 million in data center-related orders in the first half of 2025 alone.

Analysts have responded by adjusting price targets. Jefferies raised its price target for GEV to $668 from $658, while maintaining a "Hold" rating. Other firms such as HSBC ($580), Goldman Sachs ($715), and UBS ($614) have also adjusted their targets, with UBS reiterating a "Buy" rating. Susquehanna further elevated its target to $736, reflecting a positive outlook on the company's trajectory.

Broader Market Trends and Strategic Positioning

GE Vernova operates within an electricity sector experiencing a bull market, significantly influenced by the accelerating AI revolution. The company's focus on power generation products and grid modernization places it at the epicenter of this transformation, offering essential solutions for both the generation and efficient distribution of energy.

Despite a temporary 5.0% decline in stock price in September 2025 following Mitsubishi Heavy Industries' plans to expand gas turbine production, analysts generally do not perceive this as a substantial long-term risk, citing ongoing supply chain constraints within the industry. Historically, GEV shares have more than doubled over the past six months, leading to a market capitalization exceeding $170 billion. Year-to-date, the stock has advanced 92.8%.

Institutional confidence in GE Vernova remains robust, with 106 hedge funds reporting investments. Furthermore, over 3,420 funds or institutions currently hold positions in GEV, marking an 18.71% increase in ownership over the last quarter.

Analyst Consensus and Future Outlook

The consensus among analysts largely reflects a positive outlook for GE Vernova. On September 15, 2025, Melius Research upgraded its outlook for GEV from "Hold" to "Buy." The median one-year price target compiled by LSEG from 34 brokerages stands at $692. However, Morningstar provided a contrasting view, revising its fair value estimate for GEV stock to $390.00, suggesting the stock may be overvalued following its recent market appreciation.

Looking ahead, GE Vernova has raised its 2025 financial guidance, now anticipating revenue to trend towards the higher end of its $36 billion to $37 billion range. The adjusted EBITDA margin forecast has been increased to 8% to 9%, and free cash flow guidance was elevated to $3.0 billion to $3.5 billion. The successful completion of the Proficy sale in the first half of 2026 is expected to further bolster GE Vernova's ability to strategically invest in and expand its core GridOS and other energy transition offerings. Investors will closely monitor continued growth in AI data center demand, advancements in grid modernization technologies, and evolving global energy policies as key indicators for GE Vernova's future trajectory.