GE Vernova's 117% Stock Rise Highlights Demand Narrative, But Execution Risks Loom Large

What happened

GE Vernova's stock surged 117% over the past year, driven by a surge in orders and a growing $150 billion backlog, as highlighted in a recent Forbes article. Improvements in margins and significant cash flow increases have bolstered investor confidence, with the stock rising from $385 to $802.13. However, SEC filings reveal that much of the backlog growth comes from slot reservation agreements (SRAs), which management explicitly warns may not convert into firm orders, risking idle capacity and write-downs. The cash flow boost is heavily reliant on working-capital inflows from down payments and SRAs, totaling $8.0 billion in 2025, which could reverse as deliveries accelerate and supplier advances rise. With a high valuation of 44.7x P/E and 56.7x EV/EBITDA, the stock is priced for flawless execution, but key risks in SRA conversion, capacity ramp delays, and ongoing Offshore Wind losses remain unproven.

Implication

The stock's surge reflects optimism about electricity demand from data centers and grid upgrades, but it overlooks critical risks detailed in filings, such as the non-binding nature of SRAs and working-capital volatility. Elevated valuation multiples leave no margin of safety, making the stock vulnerable to downside if SRAs fail to convert or if cash flow normalizes as down payments stabilize. Key monitoring points include the conversion of SRAs into firm backlog by Q3 2026, the mid-2026 gas capacity ramp to ~20 GW annualized, and integration of the Prolec GE acquisition. Offshore Wind contract losses, which absorbed significant earnings in 2025, add persistent volatility that could undermine consolidated profitability and capital returns. A WAIT rating is justified, with better entry points likely around $650 if execution proof points emerge or if the stock corrects due to missed milestones.

Thesis delta

The new article confirms the demand narrative behind GE Vernova's stock rise but does not alter the core thesis that the company is overvalued pending proof of SRA conversion and stable cash flow. The investment case still hinges on verifying firm backlog growth beyond SRAs and sustaining free cash flow as working-capital tailwinds fade, with no new information to shift the WAIT rating or attractive entry point of $650.