It's only February, but GE Vernova's (GEV 3.58%) stock has already had an exciting year. The share rose by 13.4% in January, according to S&P Global Market Intelligence data, but sold off at the end of the month due to the emergence of new artificial intelligence (AI) models from Chinese start-up DeepSeek.
GE Vernova starts the year powering higher
The company's fourth-quarter earnings report, released on Jan. 22, helped confirm the bullish case for the stock. The company offers solutions for power generation equipment (primarily gas turbines and services), wind power (turbines), and electrification equipment (grid transmission, distribution, and software).
NYSE: GEV
Key Data Points
The key to its earnings and growth prospects is its power segment, with $2.3 billion in earnings before interest, taxation, depreciation, and amortization (EBITDA) in 2024, compared to $679 million for electrification and a $588 million loss for its wind segment.
A new reality in energy
The improvement in the company's fortunes over the last couple of years, confirmed in the recent earnings report, comes as the market has reassessed the growth prospects for its core power segment's prospects. Whereas a few years ago, when the market panicked over fossil fuel technology's role in the future of the energy mix, the rising cost and complexity of renewable energy (including GE Vernova's wind power segment, which is one of the most prominent players in wind turbines) have caused renewed investment in gas turbines and services.
It's not that the clean energy revolution won't occur, but it will take place slower than most envisaged previously. That recognition means gas will remain a significant part of the energy mix for decades. That's excellent news for GE Vernova.
Indeed, its power segment orders rose 20% in the fourth quarter and 25% for the full year compared to 2023. Of particular note, the company had 68 orders for its heavy-duty gas turbines (which generates relatively more services revenue) in 2024, compared to 41 in 2023. Moreover, in terms of power, GE Vernova received 20.2 gigawatts (GW) in orders in 2024, more than double the 9.5GW in 2023.
Image source: Getty Images.
What about DeepSeek?
It's been an impressive start to the year, and ongoing demand for power from data centers driven by AI applications supports the stock's investment case. However, the stock sold off due to excitement about releasing DeepSeek's lower-cost AI models and a potential downgrade in power demand expectations in the West.
That said, the growth of DeepSeek's AI may help snowball adoption of AI, which could be a net positive for power demand and, in turn, GE Vernova. It's too early to tell.
