GE Vernova shares have nearly doubled in price since the beginning of the year. Is it too late to buy them?

The market value of GE Vernova, the energy company that spun off from General Electric, has nearly doubled since the beginning of the year, significantly outperforming the broad market. The stock's rise has been attributed to increased demand for power from AI data centers, and some analysts believe this is just the beginning. A Melius analyst advised investors to buy GE Vernova securities and expects them to appreciate another nearly 18%.

Since the beginning of the year, the market value of GE Vernova has increased by 90%, and over the year - by almost 180%. By comparison, the main US stock index, the S&P 500, has added 12.5% and 17.5% respectively over the same time. GE Vernova shares are rising on the back of increased demand for power from AI-powered data centers, Barron's explains. Some Wall Street analysts believe the potential is still there.

Rob Wertheimer of Melius Research upgraded GE Vernova from Hold to Buy on Monday and raised his target price from $521 to $740 per share, Barron's reports. Melius' new target implies the stock is up another nearly 18% from its closing level on Sept. 15. "The stock has quintupled since the spin-off [GE Vernova from General Electric in April 2024], and there is plenty of room for positive surprises ahead on forecasts for 2027 and beyond," Wertheimer said in the note.

According to the analyst, growing demand for electricity and higher-than-expected prices will allow GE Vernova to exceed market forecasts for profits in the coming years, Investing.com specifies. Wall Street now expects the company's earnings per share to reach $18.18 in 2027 versus $7.55 in 2025, Barron's writes.

If in 2014-2024 the demand for electricity in the U.S. grew by only 0.5% per year, then in the period 2024-2035 it will increase by an average of 2.5% annually, the publication quotes an estimate by BofA Securities. That's what will create additional demand for the power generation equipment that GE Vernova produces. "The news is getting better, and some of the price spikes caused by the surge in demand are difficult to even fit into forecasts," the Melius analyst emphasized.

The analyst cited the development of AI as the main driver of increased power demand: new computing needs are already outweighing previous concerns about efficiency. "We are still in the very early stages of the AI investment cycle," Wertheimer noted.

The analyst added that industry data points to a sharp rise in the value of gas-fired power plants, with forecasts well above the current GE Vernova consensus. He said regulatory changes are reinforcing the importance of gas in the short term, despite the growing share of renewables and energy storage technologies. "A year ago, we feared that cheaper solar and battery storage would lead to peak plant closures. That was partially confirmed... but the current administration has changed course and gas is now playing an even more important role," the Melius analyst summarized.

On September 8, Goldman Sachs raised its target price on GE Vernova shares from $500 to $715 and maintained its Conviction Buy recommendation, equivalent to a "buy" advice. The investment bank's new target implies a 14% increase in the company's market value from the last close. Goldman Sachs highlighted GE Vernova's growth prospects in the generation and electrification segments. The company is already in a strong position: it has Siemens-level capacity of about 20 GW, while the market could grow to 45-60 GW in the next five years, the investment bank believes.

About 70% of analysts who have rated GE Vernova shares advise investors to buy them (Buy and Overweight ratings). Another 25% take a neutral stance with a Hold rating, while the rest recommend selling. Wall Street's average target price of $686.7 implies a 9% appreciation of the company's securities.

This article was AI-translated and verified by a human editor