GE Vernova exited 2025 with one of the strongest AI demand and backlog profiles in the energy industry. This quarter, management emphasized accelerating slot reservations, rising pricing, improving backlog margins and multi-year visibility extending into the end of the decade.
The company signed 6GW of incremental gas contracts in the final three weeks of December, bringing total Q425 as contracts to about 24GW. As a result, the Gas Power backlog plus slot reservation agreements (SRAs) expanded from 62GW to 83GW sequentially.
Management now expects to reach 100GW under contract in 2026, an upward revision from the 60GW discussed in mid-2025. Notably, the current 83GW under contract is heavily allocated toward 2029 delivery. By the time that 100GW is reached, both 2029 and 2030 capacity will be sold out.
The Importance of Slot Reservation Agreements (SRAs)
On the earnings call, management stated that reservation agreements signed today are priced approximately 10 to 20 points higher than legacy backlog, confirming the capacity scarcity could translate to higher growth.
Here is what was stated about the potential for SRAs to grow incremental growth due to higher pricing:
“When we look at where we're trending with our slot reservation agreements today versus our existing backlog, there's another 10 to 20 points of pricing strength in the SRAs today. We are pleased — you're right, we were talking in the middle of last year at 60 gigawatts and landed at 83 gigawatts because the intensity of the discussions, really late summer, fall, right through the holidays have continued to be very intense. When you think about this year getting to 100 gigawatts by the end of the year, what I would tell you is it's likely going to be a larger proportion of orders. Today, with the 83 gigawatts, it's 40 gigawatts of orders, 43 gigawatts of SRAs, that probably shifts towards more of a 60-40 split with 60% on order over the course of 2026.”
As these higher-priced reservations convert into firm orders over time, management expects backlog margins and future earnings power to continue improving:
“We expect significant growth again in Power and Electrification's backlog in '26 at better margins as we convert higher-priced gas slot reservation agreements into orders and benefit from strong demand and pricing for grid equipment.”
Equipment Orders Surge to 91% YoY Growth
Organic orders surged with growth of 65% YoY to $22.2 billion and equipment orders grew 91% YoY to $16.2 billion. Services grew 22% to $6 billion.
GE Vernova exited this year with total backlog of $150 billion, up 26% YoY. Equipment backlog reached $64 billion, a 49% increase, while services backlog grew to $86 billion. Management stated they added an incremental $8 billion in incremental margin dollars to equipment backlog in 2025 alone, exceeding the prior two years combined. Because equipment delivery cycles are long, the majority of these higher-margin orders will not begin contributing to revenue until 2027 and beyond, creating a lag between reported growth and underlying earnings power.
Electrification backlog reached $35B, up $11B year-over-year and represented GEV’s largest-ever growth in this segment. This is due to demand for substations, switchgear, HVDC and grid equipment.
Prolec Acquisition:
Prolec designs and manufactures medium-and-large power transformers that was owned 50% by GE and 50% by Mexican industrial group Xignux. The acquisition makes GE Prolec a wholly owned subsidiary. For the purchase price of $5.275 billion at closing, Prolec GE expects $3 billion in revenue at a 25% adjusted EBITDA margin with “low double-digit revenue growth in the coming years.” The electrification segment is guided to $13.5 billion to $14 billion in 2026 with Prolec representing 20% to 22%.
Transformers are a leading bottleneck with lead times of 2-4 years, to where they’ve become a gating item for AI data center power connections and grid expansion. Even if generation is available, transformers are needed to deliver power to an AI data center, which leads to a direct path for Prolec’s importance in the AI buildout. Now that Prolec is fully integrated, GEV’s electrification segment will benefit from owning one of the more capacity-constrained parts of the AI buildout. In exchange, this will lead to higher margins, pricing power and backlog visibility for GEV. Transformers are higher-margin with GEV’s electrification EBITDA margin at 14.9% in 2025 and now guided to 17% to 19%. The deal is also accretive to free cash flow within the first year.
Financials
Q4 Revenue Beat of 7.1%
GE Vernova Q4 revenue grew by 3.8% YoY to $10.96 billion, beating estimates by 7.1%, driven by rising AI energy demand. Organic revenue grew by 2% YoY to $10.8 billion. The company is a major beneficiary of the increasing energy requirements from the global AI infrastructure build-out, positioning the company as a key beneficiary of this secular trend. The continued slowdown in the Wind segment was offset by the growth in power and electrification segments that are benefitting from rising electricity consumption driven by data centers and artificial intelligence demand.
The company’s revenue growth is expected to accelerate to 9.8% YoY growth to $8.8 billion in Q1 and is expected to grow 7.8% YoY to $9.82 billion in Q2 2026.
Full-year 2025 revenue grew 9% year over year to $38.1 billion. Management expects 2026 revenue of $44–$45 billion, up from prior guidance of $41–$42 billion provided at the December 2025 Investor Update, now reflecting the acquisition of the remaining 50% stake in Prolec GE, which is expected to close in February.
Management also increased the by 2028 revenue outlook to $56 billion from $52 billion with low-teens organic growth during the period 2025 to 2028.
Segments
Q4 Power Orders grew by 77%
Q4 power orders increased 77% YoY to $11.7 billion, driven primarily by a sharp acceleration in gas power equipment orders, which more than tripled on higher volumes and favorable pricing. Gas turbine orders rose 71% YoY to 41 units, while power services orders grew 15%, reflecting continued customer investment in existing fleets.
Q4 power segment revenue grew organically by 5% YoY to $5.7 billion. Management expects high single-digit organic growth in Q1.
EBITDA margin improved by 360 basis points sequentially and 200 basis points YoY to 16.9%, primarily driven by pricing and productivity gains more than offsetting incremental costs associated with capacity expansion, R&D investments, and inflationary pressures. Management expects the EBITDA margin to be 240 basis points lower sequentially, due to seasonality, to 14.5% in Q1. However, it would be up 300 basis points YoY.
Wind Segment recovery expected in 2H 2026
Q4 Wind Segment organic revenue was down (25%) YoY to $2.34 billion primarily due to lower onshore wind equipment deliveries. Management expects organic revenue to be down high teens in Q1 due to lower onshore equipment deliveries.
Wind orders increased 53% YoY to $3.1 billion, driven by stronger onshore equipment demand, primarily outside North America. Management remained cautious about calling an inflection in U.S. orders, citing ongoing project delays and tariff-related uncertainty. In offshore, the company continues to prioritize execution of its challenged backlog.
Q4 EBITDA losses were ($225 million) or EBITDA margin of (9.5%) compared to 0.60% in the same period last year and (2.3%) in Q3. EBITDA losses widened, driven by higher losses on Offshore Wind contracts, including the impact of the recently issued U.S. order to halt construction of all offshore projects and lower Onshore Wind equipment volumes, partially offset by improved performance in Onshore Wind services. Management expects Q1 EBITDA losses of $300 million to $400 million due to lower onshore wind volume and tariffs.
Management expects a strong recovery in the second half of 2026. The company’s CFO, Kenneth Parks, said in the earnings call, “Looking at 2026, we expect significant improvement in Wind revenue in the second half of the year given only 30% of our expected onshore turbine shipments are in the first half as almost 70% of our 2025 equipment orders came later in the year. Also, the volume we're shipping in the first half has fewer contractual protections for tariffs since we signed these orders before their implementation. As a result, we expect EBITDA losses in the first half to be partially offset by profitability in the second half.”
Electrification Q4 Orders 2.5x of revenue
Electrification orders were 2.5x revenue and were up 50% YoY to $7.4 billion primarily due to growing grid equipment demand, particularly for synchronous condensers, substations partially to support data center growth and switchgear. The company also witnessed strong equipment orders growth in the Middle East, which increased over $1 billion and in North America, which more than doubled YoY.
Q4 organic electrification revenue grew by 32% YoY to $2.9 billion primarily driven by strong growth in switchgear and High-Voltage Direct Current (HVDC) equipment. Management expects a similar revenue as Q4 in the next quarter which will also include Prolec GE.
Q4 EBITDA margins improved 410 basis points YoY to 17.1% primarily due to strong volumes, productivity gains, and favorable pricing. Management expects Q1 EBITDA margin of 16.5%.
Adjusted EBITDA grew by 7.3% in Q4
The company’s Q4 adjusted EBITDA grew by 7.3% YoY to $1.16 billion with an adjusted EBITDA margin of 10.6%, an improvement of 250 basis points sequentially and 40 basis points YoY. Organic adjusted EBITDA margin improved 10 basis points YoY to 10.7%.
2025 adjusted EBITDA margin improved 260 basis points YoY to 8.4% and was in-line with the management mid-point guidance of 8.5%. Management expects 2026 adjusted EBITDA margin to improve to 12% in 2026 driven by growing backlog, favorable pricing, and improved operational execution. Management also expects adjusted EBITDA to be more second half weighted with highest revenue and adjusted EBITDA in Q4 2026.
Q4 net income was $3.7 billion or 33.5% of revenue compared to $484 million or 4.6% of revenue in the same period last year. The Q4 net income included a one-time tax benefit of $2.9 billion.
EPS
Q4 GAAP EPS was $13.39, up from $1.73 in the prior-year period, reflecting a one-time tax benefit of $10.58. Excluding this benefit, GAAP EPS would have been $2.81, below the consensus estimate of $3.13, primarily due to losses in the Wind segment.
Analysts expect strong EPS growth in the coming quarter with Q1 EPS expected to grow 127.7% YoY to $2.07 and Q2 EPS to grow 65.1% YoY to $3.07.
Cash Flow and Balance Sheet
GE Vernova is funding this growth from a position of improving financial strength. In December 2025, S&P and Fitch upgraded their investment grade credit rating to BBB from BBB-, and BBB+ from BBB, respectively. Both maintained positive outlooks on their upgraded ratings.
The company exited 2025 with $8.85 billion in cash and generated $3.7 billion in free cash flow, more than double the prior year. Gross debt will remain below 1x EBITDA even after funding the Prolec GE acquisition. In early February, the company expects to issue roughly $2.6 billion of debt in order to complete the previously announced acquisition of the remaining 50% ownership stake of Prolec GE.
Capital returns accelerated alongside growth investments, including a doubled dividend for 2026 and an expanded $10 billion share repurchase authorization. The company had cash of $8.85 billion and no debt at the end of Q4.
The company’s cash flows are improving driven by growth in profits and also improvement in working capital.
- Q4 operating cash flows grew by 169% YoY to $2.48 billion with an operating cash flow margin of 22.6% compared to 8.7% in the same period last year. The company benefitted from down payments on higher orders and slot reservations at Power as well as higher orders at Electrification.
- Q4 free cash flow grew by 214.7% YoY to $1.8 billion with a free cash flow margin of 16.5% compared to 5.4% in the same period last year.
Conclusion
GEV is a rare, quality stock in the AI space that is buffered from competition. The company will see the full weight of the United States behind its efforts as its well positioned to offset the many GWs the AI buildout needs. The demand is unquestionably high, but how fast GEV can manufacture it and what price can GEV get for that capacity. Although discussions are stretching into 2029-2030, the SRAs signed in previous years for equipment orders can offer a pricing uplift and equipment margin expansion. GEV is also expediting gas turbines with 200 machines installed in 2025 and another 200 planned for 2026. With the Prolec acquisition, GEV is also becoming a strong contender on the electrification side.
It is my best guess that when higher-beta AI stocks sell off (as they inevitably always do) that GEV offers a steadier and more of a safer, quality hedge for that trade. Keep in mind, since the AI boom began on Jan 1st 2023, GEV has outperformed Broadcom, AMD, Micron and TSM by 2X or more – proving GEV is anything but a sleepy energy stock.
Royston Roche, Equity Analyst at I/O Fund contributed to this analysis.
Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.
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