GE Vernova's Q2 Electrifies Stock, What's Next For This Top Name?

If GE Vernova’s (NYSE: GEV) latest earnings results are any indication, General Electric’s corporate restructuring continues to look like a stroke of genius. On July 23, the energy equipment spin-out saw shares soar over 14% after reporting Q2 financials. As of the July 23 close, GE Vernova has provided a total return of nearly 92% in 2025. This makes it the second-best performing stock in the S&P 500 Index, behind only Palantir Technologies (NASDAQ: PLTR).

Let’s break down GE Vernova’s Q2, which validates the bullish sentiment on the stock. Ultimately, we’ll aim to answer whether investors should continue betting that the stock’s huge run will continue or if it is time to take profits and look for opportunities elsewhere.

GEV’s Q2: This Energy Enabler Is Firing on All Cylinders

In Q2, sales came in at $9.1 billion, equating to a growth rate of 11%. This figure was approximately $328 million higher than Wall Street analysts anticipated. Just as important were the increases in the company’s orders and backlog, as these are strong indicators of future revenue.

Orders rose by 4% to $12.4 billion, 1.4 times higher than the company’s revenue in Q2. Meanwhile, GE Vernova's backlog grew 11.4% to $129 billion, 3.5 times higher than the company's expected revenue in 2025.

These figures are positive signs for investors in the near and long term. Right now, sales are outpacing expectations. Orders remain substantially higher than revenues, indicating that revenue growth can continue at this pace in the near term.

The company’s backlog indicates that long-term revenue potential is increasing slightly faster than current revenue. This suggests that GE Vernova can maintain or even accelerate its revenue growth in the coming years.

Beating sales expectations and margin improvements helped GE Vernova post earnings per share of $1.86, surpassing estimates of $1.63. Additionally, the firm increased the midpoint of its free cash flow guidance by $1 billion to $3.25 billion. This might be the most encouraging sign of all for investors. Bringing in more cash than it spends is the ultimate goal of any business, and GE Vernova is making robust progress.

AI Energy Needs Are Driving Huge Wins for GEV’s Natural Gas Solutions

Diving further into the company’s report helps explain what is driving GE Vernova's incredible success. The company’s Power segment is by far its largest, accounting for around 53% of total revenue last quarter. In this segment, the company sells natural gas turbines and provides servicing.

Power also offers nuclear, hydroelectric, and steam power equipment and services. Orders in Power rose dramatically by 44% last quarter. Natural gas orders nearly tripled versus Q2 2024, driving this. Utility companies must scale up their electricity generation capacity to keep up with surging demand due to artificial intelligence (AI).

AI data centers need energy that is both reliable and clean. This is why so many hyperscale data center companies have signed agreements for nuclear energy. However, the availability of nuclear sites is dropping, and new sites can take a decade to build.

Thus, reliable and relatively clean natural gas is a logical alternative for scaling up energy capacity. Given its leadership in natural gas turbines, GE Vernova is an ideal company for meeting the demand for AI energy here and now.

GE Vernova is also working to design and build nuclear small modular reactors (SMRs). SMRs help get around the long construction times of large reactors but are still in the developmental phase. This positions the company to meet the longer-term interests of hyperscalers. Additionally, GE Vernova’s scale likely gives it a competitive advantage over smaller SMR developers.

GEV: Valuation Is Lofty, But So Are Its Long-Term Opportunities

As of July 23, GE Vernova trades at a forward price-to-earnings (P/E) ratio of 80x.

That number is likely to come down as analysts revise earnings estimates upward. However, it is still 60% above the firm's average forward P/E of 50x since April 2024.

This suggests that shares could be highly overvalued.

However, it's tough to argue with the company’s long-term prospects, especially given the potential of its SMR business.

At the same time, it's hard to say the stock’s massive surge and ballooning forward P/E don't warrant taking some money off the table.

Maintaining some exposure to this name while looking for cheaper opportunities elsewhere feels like a prudent balance for investors to strike.

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The article "GE Vernova's Q2 Electrifies Stock, What's Next For This Top Name?" first appeared on MarketBeat.