Wells Fargo says GE Vernova is being bought as demand for AI power grows
GE Vernova can help meet the huge energy demands from artificial intelligence, according to Wells Fargo. The firm began covering the energy company with an overweight rating. Its price target of $385 represents an upside of more than 12% from Wednesday’s close. The company was spun off from General Electric in early 2024, along with other GE assets. Analyst Michael Blum said that strong energy demand linked to AI could lead to GE Vernova emerging as the main beneficiary, especially because the next generation will need to update the energy grid. Specifically, the analyst thinks gas will be the most in-demand form of energy going forward, which could translate to an 8% compound annual growth rate for GE Vernova over the next eight years. GEV YTD mountain GE Vernova stock. “As energy demand grows and more distributed generation is added to the mix, aging grids will require significant investment to manage a complex and dynamic environment,” Blum said. “GEV transformers, HVDC [High-voltage direct current]and grid software products are well positioned to benefit from this growing demand.” Blum expects energy demand to grow at a compound annual growth rate of 3% from 2024 to 2032. The analyst also noted that GE Vernova trades at a discount compared to -S & P 500. The stock trades at 9.9 times forward earnings, per FactSet, while the broader market index it trades 24 times forward. “We are experiencing high levels of demand for its manufactured and grid products, and we believe that the company has strong potential for increased pricing and reduced production,” Blum said.
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