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LivestreamMenuGE Vernova shares were being punished on Wednesday for an earnings miss. While we understand that a miss is a miss, in this case, we think that sellers are focusing on the wrong metric for judging the results. Revenue in the second quarter ended June 30 increased about 22% year over year to $11.1 billion, topping expectations of $10.7 billion, according to LSEG. Earnings per share (EPS) increased 33% to $2.47 but came up short versus the LSEG-compiled consensus estimate of $3.01 apiece. Why we own it GE Vernova has several powerful secular tailwinds at its back, including the need for more reliable power and electrification, especially as AI drives up demand for energy-intensive data centers. Competitors : Siemens Energy , MHI Most recent buy : Nov. 6, 2025 Initiated : May 13, 2025 Bottom line Using the EPS miss as a reason to knock the Club stock down 8% is short-sighted. The more important line item to watch is order growth, which jumped 88% organically (or 95% on a reported basis) to $24.2 billion in Q2, driven by strong equipment demand in the company’s Power and Electrification segments. After all, GE Vernova’s natural gas turbines are crucial to running power-hungry artificial intelligence data centers. Analysts focus on orders to gauge demand rather than simply revenue, which may reflect past order fulfillment. GE Vernova’s backlog of $176 billion was also way up, thanks to a sequential acceleration in total order growth, which drove the second quarter’s total book-to-bill to over 2. That means more than twice as many orders came in as orders filled. That tracks given management saying on the post-earnings call that gas power is “mostly sold out through 2030,” with an expectation that more than half of the 2031 production slots will be sold by the end of this year. CEO Scott Strazik said the company is on track to achieve a $200 billion backlog in 2027. The company is not sitting still, however, indicating a ramp-up in capacity in the years to come to convert the backlog more quickly. As a result, the company raised its full-year revenue outlook, which is generally another good set-up for long-term investors willing to look past a three-month earnings miss. Remember, the best buying opportunities usually occur when a stock goes down on a near-term hiccup in an otherwise strong long-term story. That’s what we’re seeing with GE Vernova’s numbers. Not to mention, GE Vernova was a cash machine in Q2, with free cash flow soaring more than 2,500% year over year to $5.12 billion. That was way above the $1.2 billion estimate. Management credits higher down payments on increased orders and slot reservations in its Power segment. The company also significantly boosted its full-year free cash flow numbers. GEV YTD mountain GE Vernova YTD While reiterating our buy-equivalent 1 rating on the stock and our $1,300-per-share price target, we would not be surprised to see near-term upside capped due to investors taking profits in a stock still up nearly 55% year to date. That 2026 performance comes despite Wednesday’s decline, which was really a continuation of the share price slide since closing at a record high of nearly $1175 on June 30. Segment Commentary In Power , revenue increased 14% on a reported basis and organically to $5.48 billion but missed the $5.6 billion estimate. Organic sales are revenue from existing operations and remove the impact of foreign exchange fluctuations. While we don’t like to see a miss, especially on revenue, the aforementioned backlog growth was enough for us to give management the benefit of the doubt that the miss is more about timing than any demand issues. Strazik made that point on the call. “The long-cycle electric power industry is in the early stages of a multi-decade growth opportunity,” the CEO said, stressing the “strong global demand” out there for the company’s equipment and services. On the equipment side, Strazik said that first-half 2026 orders were pricing more than 20% higher than fourth-quarter 2025 equipment orders as higher-priced slot reservation agreements converted into the backlog. Due to a higher mix of aeroderivative turbines versus heavy-duty gas turbines, the team booked orders at a higher dollar per kilowatt (KW) rate. Unlike the flagship heavy-duty turbines, aeroderivative turbines are, as the name implies, derived from jet engines. While they don’t generate the same amount of energy, they are more compact, lightweight, and modular. Segment orders increased 134% year over year organically, pushing the Gas Power backlog up to 53 gigawatts (GW), with another 63 GW in slot reservation agreements. GE Vernova’s products are sized in the sustained GW they can produce. Of course, signing contracts is one thing, but the team then needs to fulfill those contracts to get paid. That’s why GE Vernova is investing in additional manufacturing and delivery capacity, with plans to deliver 20 GW of annual capacity by the end of the current quarter, before ramping that output capacity to 24 GW in 2028, and targeting 30 GW of annual production capacity by 2030. The segment delivered an EBITDA margin of 18.8%, representing a 240-basis-point year-over-year expansion. EBITDA, which stands for earnings before interest, taxes, depreciation, and amortization, is a measurement of operating profitability. EBITDA margin is operating profitability before depreciation and amortization as a percentage of total revenue. In Electrification , revenue increased 68% (or 29% organically) to $3.64 billion, beating the $3.44 billion estimate. The segment delivered an EBITDA margin of 18.4%, representing a 390-basis-point year-over-year expansion. Products in this segment include power transformers and switchgears. On the software side, the company offers solutions to manage data and network visibility. On the call, Strazik said, “We continue to see robust demand from unprecedented electricity demand growth, increasing grid stability needs, and national security interests. Our backlog growth at Electrification has been driven by both traditional customers and data centers, with equipment backlog rising above $40 billion. Into 2Q, we booked $2.7 billion of data center orders in Electrification, bringing total segment data center orders to over $5 billion in the first half of 2026, more than double full year 2025.” Total segment orders increased 66% organically year-over-year, resulting in a book-to-bill of about 1.7 and equipment backlog growth of 69% versus the year-ago period. In Wind , the smallest of the three segments, revenue decreased 10% (or 11% organically) to just over $2 billion. It did, however, manage to outpace expectations. The segment delivered negative EBITDA of $252 million, much more red ink than in the year-ago period and more than estimates. EBITDA margin grew to negative 13.6% from last year’s negative 7.3%. Wind power has fallen out of favor during President Donald Trump ‘s second term in office, as his administration has favored fossil fuels over renewable energy sources. Guidance For full-year 2026, GE Vernova now expects 2026 revenue of $45.5 billion to $46.5 billion, up from the $44.5 billion to $45.5 billion range previously forecast, and ahead of the $45.45 billion estimate, according to LSEG. Management continues to target a 12% to 14% adjusted EBITDA margin for the year, bracketing the 13.7% estimate, according to FactSet. Driving the upward revenue revision, management now expects Power to deliver 18% to 20% organic revenue growth, up from 17% to 19% previously. Power’s EBITDA margin forecast was reaffirmed at 17% to 19%. In Electrification, the team now expects sales of $14.5 billion to $15 billion — inclusive of $3.1 billion from Prolec GE, up from $3 billion — that’s up from $14 billion and $14.5 billion previously. Electrification’s EBITDA margin target was reaffirmed at 18% to 20%. Free cash flow for the full year is now expected to be between $11.5 and $12.5 billion, up from the prior range of between $6.5 billion and $7.5 billion. For the third quarter, the company expects Power organic revenue growth of 17% to 19% on the back of stronger demand for both equipment and services. The segment’s EBITDA margin is expected to be 17% to 18%. Management sees Electrification revenue of $3.8 billion to $4 billion in Q3, with “modest sequential EBITDA margin expansion.” Wind revenue for the current quarter is expected to decline low-double digits on a percentage basis, with EBITDA at about breakeven. (Jim Cramer’s Charitable Trust is long GEV. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. 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