GE Vernova Secures Incremental Gas Turbine Reservation, Aligning with Demand Narrative but Not Altering Core Risks

What happened

GE Vernova has entered into a gas turbine and generator reservation agreement with Maxim Power Corp., allowing Maxim to hold a manufacturing slot for a 7HA.02 turbine with a target delivery by 2030 and a non-refundable deposit in 2026. This aligns with the company's strategy to convert AI/data-center-driven power demand into contracted equipment slots, as highlighted in the DeepValue report's focus on growing gas turbine reservations. However, the report notes that slot reservations need to progress from 83 GW toward ~100 GW under contract in 2026 to validate the growth thesis and support the current high valuation. While this agreement adds to backlog, it represents only a minor incremental step and does not address broader concerns about cash flow quality, which relied on a $4.1B working-capital inflow in 2025, and ongoing Wind segment losses. Investors should view this as a confirmation of demand momentum but recognize it as insufficient to change the fundamental investment outlook without more substantial evidence.

Implication

The reservation agreement adds incrementally to GE Vernova's gas turbine backlog, supporting management's target of reaching ~100 GW under contract and reinforcing the electrification demand narrative. However, the non-refundable deposit in 2026 may provide a temporary cash inflow, but the DeepValue report warns that 2025 free cash flow of $3.7B relied heavily on working-capital tailwinds that could normalize. The Wind segment remains a drag, with guided losses of ~$400M in 2026, and this deal does not impact that structural weakness or the integration risks from the Prolec acquisition. Valuation at 51.7x EV/EBITDA already prices in aggressive execution, making this small reservation insufficient to justify a re-rating without broader slot reservation growth. Therefore, investors should maintain a cautious stance, awaiting 1Q–2Q26 data on slot reservations and free cash flow resilience before considering entry.

Thesis delta

This news does not materially shift the investment thesis, as it confirms ongoing demand for gas turbines but does not address core concerns. The thesis still hinges on observable progress in gas turbine slot reservations growing from 83 GW toward ~100 GW under contract in 2026 and free cash flow maintaining $5.0–$5.5B despite working-capital normalization. While reinforcing the base scenario, it leaves unchanged the risks from Wind losses, high valuation, and cash flow quality that support the 'WAIT' rating.