Executive Summary / Key Takeaways

• GE Vernova is strategically positioned to capitalize on an accelerating global electrification supercycle, driven by unprecedented demand for reliable power, grid infrastructure, and decarbonization solutions, particularly from data centers and industrial growth.
• The company delivered robust Q3 2025 results, with organic revenue growth of 10% and adjusted EBITDA tripling year-over-year, alongside significant backlog expansion to $135 billion, underscoring strong operational execution and pricing power.
• The acquisition of the remaining 50% of Prolec GE is a transformative move, immediately accretive to EBITDA, bolstering the Electrification segment's market leadership in North American transformers, and unlocking substantial synergies and growth opportunities.
• GE Vernova is actively investing in and leveraging differentiated technologies, including advanced gas turbines, Small Modular Reactors (SMRs), and AI-driven grid solutions, to enhance efficiency, expand capacity, and solidify its competitive moat.
• Despite challenges in the Wind segment and the impact of global tariffs, the company reaffirmed its full-year 2025 guidance for revenue, adjusted EBITDA margins, and free cash flow, demonstrating confidence in its strategic initiatives and lean operational model.

Powering a New Era: GE Vernova's Strategic Foundation

GE Vernova Inc. ($GEV), an independent entity since its spin-off from General Electric Company (GE) on April 2, 2024, stands at the forefront of a global energy transformation. The company is purpose-built to lead in the electric power industry, offering a comprehensive portfolio of products and services that generate, transfer, orchestrate, convert, and store electricity. This strategic focus enables electrification and decarbonization, underpinning the progress and prosperity of communities worldwide. Its operations are segmented into Power, Wind, and Electrification, each playing a critical role in shaping a more reliable, secure, and sustainable electric power system.

The world is experiencing an "accelerated electrification" era, characterized by unprecedented investment in energy infrastructure. This surge is fueled by manufacturing growth, industrial electrification, the proliferation of electric vehicles, and the escalating demands of emerging data centers. North America, in particular, is witnessing load growth on a scale not seen since the post-World War II industrial build-out, a trend that is now global. Countries like India, which relies on coal for 80% of its electricity, and Saudi Arabia, committed to a 50/50 mix of gas and renewables by 2030, exemplify the immense opportunities for GE Vernova to deliver reliable and affordable power. This demand drives growth not only for new equipment but also for high-margin services, as increased utilization of the installed base creates opportunities for additional service revenues and upgrades.

Competitive Landscape and Strategic Positioning

GE Vernova operates within a highly competitive global energy sector, contending with established players such as Siemens Energy AG (ENR), Vestas Wind Systems A/S (VWDRY), ABB Ltd (ABB), and Schneider Electric SE (SBGSY). Each competitor brings distinct strengths to the market. Siemens Energy, for instance, is a global leader in power generation and transmission, often demonstrating integrated system solutions and strong international partnerships. Vestas Wind Systems specializes in wind energy, known for its technological advancements in turbine efficiency and a robust project pipeline. ABB excels in electrification, robotics, and automation, with a focus on digitalized infrastructure. Schneider Electric is a leader in energy management and automation, emphasizing sustainable energy and digital transformation.

GE Vernova's unique value proposition lies in its ability to offer end-to-end integrated energy solutions, leveraging its legacy in energy innovation and deep customer relationships, particularly in the U.S. market. The company's diversified portfolio, spanning gas, nuclear, hydro, steam, wind, and comprehensive electrification solutions, allows it to address complex customer needs more holistically than specialized rivals. While Siemens Energy may hold an edge in global reach and ABB in automation speed, GE Vernova's strategic adaptability in energy transitions and its focused U.S.-centric strategy provide a strong competitive advantage in domestic markets. The company is actively working to streamline its supply chain and enhance operational efficiency through its lean culture, aiming to counter competitive pressures and improve profitability.

Technological Differentiation and Innovation

GE Vernova's investment thesis is deeply intertwined with its differentiated technology and relentless pursuit of innovation, which are foundational to its competitive moat and long-term growth strategy.

Gas Turbines: At the core of its Power segment are advanced gas turbines, including the highly efficient HA-turbines, which are among the largest and most efficient baseload units available. These technologies offer tangible benefits such as superior energy efficiency and dispatchable power, critical for grid stability and meeting escalating demand. The company is also investing in cutting-edge research and development for carbon capture and sequestration, exemplified by the Net Zero Teesside Power project, which aims to be the first gas-fired power station fully integrated with carbon capture technology. This initiative positions GE Vernova to address decarbonization goals while maintaining reliable power generation.

Small Modular Reactors (SMRs): A significant long-term differentiator is the BWRX-300 nuclear SMR, a compact 300-megawatt reactor. This technology offers substantial benefits over traditional large-scale nuclear plants, including potentially lower construction costs and faster deployment due to its modular, prefabricated design. It also presents an opportunity to integrate within the existing security infrastructure of current nuclear sites, offering economic and operational advantages. R&D efforts are progressing rapidly, with the first license to construct in North America issued in Ontario, Canada, in Q1 2025, and an application by TVA to construct at Clinch River. A strategic alliance with Samsung (SSNLF) was announced in Q3 2025 to advance BWRX-300 SMRs outside North America, with a stated goal of commissioning the first SMR in the U.S. by late 2030. These developments are crucial for providing reliable, zero-carbon power in the coming decades.

Electrification Technologies: In the Electrification segment, GE Vernova is innovating across grid solutions, power conversion, and storage. Key technologies include synchronous condensers, which provide essential voltage support and frequency regulation to stabilize grids, particularly those with high renewable penetration. The company's GridOS platform, enhanced by the acquisition of Alteia (an AI and visualization technology partner), helps customers manage and orchestrate the grid more efficiently. Furthermore, GE Vernova is increasing R&D to develop and deliver more products tailored for data centers, including potentially producing HVDC (High-Voltage Direct Current) transformers locally in North American factories through the Prolec GE acquisition. These technological advancements contribute to grid resilience, efficiency, and the seamless integration of diverse energy sources.

AI, Robotics, and Automation: Beyond specific product lines, GE Vernova is making significant investments in artificial intelligence (AI), robotics, and physical automation. AI is already enhancing engineering productivity for gas turbine controls and improving bidding activity through design verification and validation. Physical automation is gaining traction in manufacturing processes such as material handling, inspection, surface treatment, and assembly. These investments, growing over 20% in 2025 for R&D and CapEx, are expected to drive substantial value for customers and owners by improving efficiency and productivity in the latter half of the decade. The company's lean culture provides a solid foundation for these advanced technologies, ensuring waste is eliminated before automation is applied.

The "so what" for investors is clear: these technological differentiators enable GE Vernova to address the most pressing energy challenges, capture high-growth markets like data centers, and maintain a competitive edge. The ability to offer more efficient, reliable, and sustainable solutions translates into stronger pricing power, lower operational costs, and ultimately, enhanced financial performance and market positioning for long-term growth.

Financial Performance and Operational Momentum

GE Vernova's financial performance in Q3 2025 and year-to-date reflects strong operational execution and a compelling response to market demand. The company reported total revenues of $9.97 billion for the three months ended September 30, 2025, an organic increase of 10% year-over-year. This growth was broad-based, with organic equipment revenues up 10% and organic services revenues up 11%. For the nine months ended September 30, 2025, total organic revenues increased by 12% to $27.03 billion.

Profitability saw a significant uplift, with adjusted EBITDA more than tripling year-over-year in Q3 2025 to $811 million, and the adjusted EBITDA margin expanding by 600 basis points. Year-to-date, adjusted EBITDA increased by $1.1 billion to $2.04 billion. Gross profit for Q3 2025 increased due to improved performance across all segments, particularly Wind, Electrification, and Power. Selling, general, and administrative (SG&A) costs remained flat for the quarter, reflecting successful cost reduction activities offsetting labor inflation.

The company's backlog continues to expand, providing significant revenue visibility. Total backlog reached $135 billion as of September 30, 2025, representing a $16 billion increase in 2025 and a $7 billion increase in Q3 alone. Equipment backlog grew to $54 billion, up $11 billion year-to-date, while services backlog increased by $5 billion to $81 billion. Management emphasizes that these backlog margins remain healthy due to disciplined underwriting and favorable pricing.

Segmental Contributions

Power Segment: The Power segment demonstrated robust performance, with Q3 2025 revenues up 15% to $4.84 billion and segment EBITDA increasing 29% to $645 million, achieving a 13.3% margin. This was primarily driven by Gas Power, benefiting from Heavy-Duty Gas Turbine deliveries, project commissioning, and favorable pricing. Gas turbine backlog grew from 29 to 33 gigawatts in Q3, with slot reservation agreements increasing to 29 gigawatts, bringing the total to 62 gigawatts. The Power Services backlog alone increased by $4 billion year-to-date, driven by growth in gas and steam.

Wind Segment: The Wind segment, while facing market headwinds, showed signs of improving profitability. Q3 2025 revenue decreased by 8% to $2.65 billion, but EBITDA losses improved by approximately $250 million year-over-year, resulting in a loss of $61 million and a 2.3% margin. This improvement was attributed to more profitable onshore equipment, price, and productivity, coupled with lower offshore contract losses. Onshore Wind services orders were up 27% year-to-date, indicating progress in repowering and fleet availability.

Electrification Segment: The Electrification segment continued its impressive growth trajectory, with Q3 2025 revenues surging 35% to $2.60 billion and segment EBITDA doubling to $393 million, achieving a 15.1% margin. Equipment orders more than doubled year-over-year, driven by strong demand for Grid Solutions (high-voltage direct current solutions, switchgear) and Power Conversion Storage (battery energy storage solutions). Notably, the company secured $1.6 billion in orders for synchronous condensers in Saudi Arabia. Orders from hyperscalers for electrification needs reached $400 million in Q3 alone, totaling approximately $900 million year-to-date, a significant increase from $600 million in all of 2024. The Electrification equipment backlog expanded to $26 billion, up almost $8 billion compared to Q3 2024.

Liquidity and Capital Allocation

GE Vernova maintains a strong financial position, with cash, cash equivalents, and restricted cash totaling $7.9 billion as of September 30, 2025. The company also has access to a $3 billion committed revolving credit facility. Cash flows from operating activities increased by $0.8 billion in the nine months ended September 30, 2025, driven by higher net income and effective working capital management, including increased contract liabilities from down payments on orders.

The company's capital allocation strategy prioritizes organic investments for profitable growth, returning at least one-third of cash generated to shareholders, and executing targeted M&A. In Q3 2025, the Board of Directors declared a $0.25 per share quarterly dividend. The company also repurchased 1.1 million shares for $0.7 billion in Q3 2025, and 6.3 million shares for $2.2 billion year-to-date, at an average price of $357 per share. This reflects management's conviction in the incremental value embedded in the stock.

Strategic Initiatives and Outlook

GE Vernova's strategic roadmap is designed to capitalize on the accelerating energy transition and solidify its market leadership.

Prolec GE Acquisition: A pivotal strategic move is the planned acquisition of the remaining 50% stake in the Prolec GE joint venture for approximately $5.3 billion, expected to close by mid-2026. Prolec GE, a leading transformer supplier, is projected to generate $3 billion in revenue in 2025 at strong EBITDA margins of 25%, making it immediately accretive to GE Vernova's EBITDA. This acquisition will significantly strengthen GE Vernova's capabilities in the North American grid equipment market, streamline the customer experience, and unlock $60 million to $120 million in annualized cost synergies by 2028, with additional revenue synergies from leveraging a combined global footprint and expanding product offerings.

Capacity Expansion and Lean Operations: The company is aggressively expanding its production capacity. Gas Power is on track to reach an annualized production runway of 20 gigawatts by Q3 2026. In Electrification, a $100 million investment and 250 new jobs at its Charleroi, Pennsylvania factory are expected to double switchgear volume by 2028. Prolec GE is also investing $300 million in capacity expansions across its sites. These efforts are underpinned by GE Vernova's deeply embedded lean culture, which drives continuous improvements in safety, quality, delivery, and cost. A restructuring plan initiated in July 2025 aims to reduce general and administrative costs by $250 million annually starting in 2026.

Reaffirmed 2025 Guidance: Despite an estimated $300 million to $400 million impact from global tariffs and inflation (net of mitigating actions), GE Vernova reaffirmed its full-year 2025 financial guidance. The company expects revenue to trend towards the higher end of its $36 billion to $37 billion range, adjusted EBITDA margin to be between 8% and 9%, and free cash flow to be in the range of $3 billion to $3.5 billion.

• Power: Organic revenue growth is expected to be between 6% and 7%, with EBITDA margins in the 14% to 15% range.
• Wind: Revenue is anticipated to be down high single digits organically, with EBITDA losses of approximately $400 million.
• Electrification: Organic revenue growth is now expected to trend towards 25% (up from ~20%), with EBITDA margins in the 14% to 15% range (raising the lower end of prior guidance), driven by better-than-anticipated output.

Risks and Challenges

While the outlook is compelling, GE Vernova faces several pertinent risks. The Wind segment continues to present challenges, particularly in onshore wind, where U.S. equipment orders remain soft due to permitting delays and policy uncertainty, potentially impacting 2026 revenue. The company does not foresee adding to its offshore backlog without substantially different industry economics, and existing offshore contracts have incurred incremental losses of $171 million in Q3 2025 and $296 million year-to-date due to project cost estimate changes.

Global tariffs and inflation pose a significant cost pressure, with an estimated $300 million to $400 million impact in 2025, although mitigation efforts are underway. Disruptions in the supply chain, including the high cost or unavailability of raw materials, components, and products, could also affect operations. Furthermore, global economic trends, geopolitical risks, and changes in government policies related to energy and decarbonization could impact demand and funding for projects. The company also faces inherent risks related to product quality, legal proceedings, and environmental obligations.

Conclusion

GE Vernova is strategically positioned to thrive in the accelerating electrification supercycle, leveraging its diversified portfolio, technological leadership, and disciplined operational execution. The company's robust Q3 2025 performance, marked by strong revenue growth, tripling adjusted EBITDA, and significant backlog expansion, underscores its ability to convert market demand into tangible financial results. The transformative acquisition of Prolec GE is a testament to GE Vernova's proactive approach to strengthening its core Electrification segment and unlocking substantial synergies.

With a clear roadmap for capacity expansion, a deeply embedded lean culture, and strategic investments in AI, robotics, and SMRs, GE Vernova is building a resilient and highly profitable enterprise. While challenges in the Wind segment and the persistent impact of tariffs require ongoing management, the company's strong balance sheet, commitment to shareholder returns, and reaffirmed 2025 guidance reflect confidence in its trajectory. GE Vernova is not merely participating in the energy transition; it is actively shaping it, positioning itself for sustained profitable growth and long-term value creation for investors.