The buzz around artificial intelligence just seems to never end. The investor theme around A.I. has been almost as impressive, albeit not yet as widespread, as the Internet boom of the late 1990s. Investors have been through many of the go-to stocks like NVIDIA, Super Micro, Microsoft and so on for how best to profit off of the A.I. trends. Perhaps the biggest victories are those that are less in the limelight as uncovered gems. And what about when there are other growth avenues within the same story beyond that?

GE Vernova, Inc. (NYSE: GEV) may be that underlying hidden gem for the A.I. and the ongoing boom in electricity demand. This stock has only been on its own outside of the former General Electric shadow as a spin-off from GE Aerospace at the start of April (2024). Its stock has managed to rally about 50% since the start of April and it’s up over 70% from the lows shortly after its spin-off was completed. Is all that upside coming from the underlying A.I. theme or is it an even more widespread story?

Tactical Bulls digs through dozens of Wall Street research reports each morning to find opportunities for long-term investors and short-term traders alike. These Buy, Sell and Hold ratings often present opportunities that would otherwise be easy to miss or overlook. It turns out that GE Vernova just keeps getting more fans on Wall Street. Maybe that old GE holding company wasn’t so bad after all.

GE Vernova is considered a way to play the growing demand for electricity used by AI data centers, as well as additional electricity demand from powering electric vehicles and other additional power needs. The company makes natural gas-fired power generation turbines, wind turbines, and electricity technology. The company’s own presentations show that it has around 7,000 installed gas turbines, about 55,000 wind turbines and that services are about 65% of its backlog. The company also recently updated guidance and showed how its backlog growth looks as well.

WALL STREET IS LOVING GEV

GE Vernova was raised to Buy from Neutral and its price objective was raised to $300 from $200 at BofA Securities. GE Vernova has tailwinds from higher spending on electricity and the grid, and the analyst sees GEV’s gas power services business as an underappreciated asset with about 29% of GEV’s total revenues. On top of raising 2025/26 growth targets, BofA’s Andrew Obin sees another catalyst coming fairly soon:

We believe GEV shares can deliver beat and raise results in many coming quarters. We see the December 10th investor event as a positive catalyst. We expect management to raise its medium-term targets and potentially announce a buyback, given the build-up of excess cash. We argue US electrical growth is poised to accelerate and GE Vernova has greater US exposure relative to peers.

Morgan Stanley also reiterated its Overweight rating on September 13 and raised its target to $256 from $220. Morgan Stanley’s report also noted that an underappreciated margin upside within the Electrification unit. That report said:

On the back of strong demand for grid equipment, management expects the Electrification equipment backlog to triple to ~$18bn by the end of 2024, with North America serving as its fastest growth market. Similar to its gas power business, strong demand and limited supply among key suppliers is driving higher pricing. Recall, this is long lead-time equipment (2+ years), therefore, the pricing benefit that GEV is accruing today, will not convert until 2026+.

Other analysts have also been jumping on the GE Vernova bandwagon…

• Barclays also just recently started GEV with a Buy rating on September 16 and the firm assigned a $250 price target.
• BMO Capital Markets started GEV with a Buy rating on September 13 and it assigned a $245 price target.
• JPMorgan reiterated its Overweight rating on September 13 and raised its price target to $240 from $216.
• Evercore ISI reiterated its Outperform rating on September 12 and raised its target to $240 from $202.
• Jefferies started GEV with a Buy rating on September 4 and issued a $261 price target.

If six analyst target hikes in two weeks is not enough, there were a slew of other analyst calls from August and some of them were the same analysts above with positive calls as well. Some of the firms in August starting GEV positively and/or raising target prices were William Blair, HSBC, and Morgan Stanley; and July’s analyst upgrades and positive ratings included firms like Goldman Sachs, RBC Capital Markets, Mizuho, Evercore ISI and JPMorgan.

PRICE PERFORMANCE FLAGS

Tactical Bulls would remind its readers that no single analyst call should ever the sole basis for deciding to buy or sell a stock. While this is actually many analyst calls rather than just one call, investors need to do their own research before deciding to chase this stock. Included below is a chart from StockCharts.com that shows its performance since GEV’s spin-off was completed in April.

Investors should also pay attention to GEV’s stock chart. After pulling back to $160 from $180 in that early August market panic, its shares surged back to the $180-190 range , then went up to a $190-205 range and they have since exploded higher to above $230. This is really over the course of a month rather than a year — so its chart looks a bit like a rocket that at some point will need to face profit taking or valuation concerns. Then again, technical analysis doesn’t help much if there is a mania of investor demand.

GEV shares were last seen up 4% at $239.00 and its new high of $240.00 was seen briefly on this same morning.

Courtesy of StockCharts.com