This Power Stock Has Soared 500%... And Is Still Dirt-Cheap
If you're talking about the market's top stocks in 2026, you're likely talking about power.
A few weeks ago, we covered the AI electricity boom and how power companies – like natural gas producer Antero Resources (AR) – were soaring from never-ending demand.
But that's just the start.
We need so many gigawatts of electricity that even the countless energy-related stocks that have already spiked still have room to run... a lot of room.
To see what I mean, this week, I'm digging into the company that builds the power-generation equipment used to convert resources like natural gas into electricity.
That company is GE Vernova (GEV).
In 2024, industrial giant General Electric spun off its power business as GE Vernova... allowing it to operate as its own company and trade as its own stock.
GE Vernova makes gas turbines and other energy-transmission equipment. In America's race to modernize its power grid, few things are more important. That has been a big boon for the company – and investors.
As you can see, GEV shares have taken off over the past two years, up nearly 500%...
But again, this is a stock that still has further to go. To see exactly how much further, I sat down with Rob Spivey. He's the director of research at our corporate affiliate Altimetry.
Altimetry specializes in fundamental analysis that reveals the true earnings power of a business. It seeks to understand what's priced into shares... and what's not.
Here's what Rob says is happening with GE Vernova right now...
Three Big Ideas About GE Vernova
The Grid Deficit Nobody Wants to Talk About
America is running out of constant ("baseload") power.
Over the past 20 years, the U.S. has made a slow, deliberate choice to move away from coal and toward renewables. That was the right call for a lot of reasons. But we haven't replaced coal with enough steady energy generation yet.
Energy consumption was close to flat over that same period. So we managed with what we had. But now the bill is coming due...
New demand is roaring. Data centers alone are projected to need 90 gigawatts of power over the next three to five years. Industrial reshoring adds another 30 gigawatts on top of that.
That's enough to power tens of millions of homes in the U.S.
There's no quick fix. Solar and wind can't carry the load alone. Nuclear power takes a decade to build. And the one plant we did build in the past 25 years took twice as long and cost four times the original budget.
That supply-demand crunch is a big tailwind behind GE Vernova. And based on those numbers, it's not going away anytime soon.
The Arms Dealer Gets Rich Either Way
We've talked before about betting on the "picks and shovels" AI plays – the businesses supplying the equipment, chips, and power that AI companies rely on – rather than AI stocks themselves.
As Rob explains it, "[You want to buy] the arms dealer instead of one of the arms buyers. The neoclouds are making a bet that AI demand justifies their enormous capital spend. GE Vernova doesn't have to make that bet. The orders are already in the door."
The company makes the turbines and grid equipment that every data center, every chip factory, and every reshored manufacturer needs to run. It's one of only three companies in the world that can supply power-generating turbines.
The natural gas turbine market largely breaks down geographically, with a little crossover on the margins. GE Vernova owns the U.S., Siemens Energy owns Europe, and Mitsubishi owns Asia.
What makes the business even stronger is the service tail. GE Vernova has somehow turned the turbine into a subscription. It sells the machine... but it also generates revenue from decades of servicing and maintenance.
GE Vernova has signed orders from utilities and grid operators that have no other supplier to turn to. It's building capacity as fast as it can and raising prices, too. Free cash flow has surged from expanding margins. And the $160 billion worth of orders in its backlog suggest it'll stay high.
The Market Is Pricing in Half the Story
On the surface, on a basic price-to-earnings basis, GE Vernova looks expensive.
But investors should always look past the surface to figure out a company's true intrinsic value.
At Altimetry, Rob reverse engineers expectations from price. What does the stock price tell you about what the market expects from GE Vernova's fundamentals?
On a Uniform Accounting basis, GE Vernova's earnings margins are currently around 5%.
(These margins are based on special Uniform Accounting measures developed by Altimetry – so they may look different than what you find online. In short, the folks from Altimetry start by looking at a company's current stock price. From there, they calculate what the market expects from the company's future cash flows. Then, they compare that with their own cash-flow projections.)
By comparison, a best-in-class industrial peer like Emerson Electric (EMR) runs at 22% earnings margins.
Based on GE Vernova's current stock price, the market expects margins to hit only 15% or so.
That gap, between 15% and 20%, is why the stock is cheap. According to Rob, to get to 20% margins, GE Vernova only needs to grow revenue at about 10% a year.
With its massive backlog and the ever-present demand for more power generation, that's a simple hurdle to clear.
The stock is up. The story is out. But the full earnings power of this business is still not baked into the share price... And that's a huge opportunity for investors paying attention.
Watch to Learn More
To learn more, check out my discussion with Altimetry's Rob Spivey. We sit down in this week's Top Stocks episode to further discuss AI power needs, the state of the U.S. electrical grid, and how GE Vernova can profit from it all...
You can watch the entire episode on our YouTube page by clicking the image above. Be sure to like and subscribe to get more of our videos.
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Straight to the Source
- GE Vernova's detailed 2025 investor presentation
- GE Vernova's explanation of how a gas turbine works
- Professor Joel Litman – a friend and colleague of Rob and I – has a new presentation on the AI power boom. It's filmed right on the build site of a facility providing a new type of energy to the AI power boom. You can (and should!) watch the free video here.
Until next week,
Matt Weinschenk
Publisher and Director of Research
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