Is GE Vernova (GEV) Too Dependent on AI-Driven Power Demand?

GE Vernova Inc. (NYSE:GEV) is among the best debt-free stocks to buy now. In a research note cited by The Fly on January 12, Citi adjusted its estimates and price targets for its industrials group coverage as part of its Q4 outlook review. As a result, it raised its price target on GE Vernova from $658 to $708 while maintaining a Neutral rating, implying a 10% upside.

Before Citi, Robert W. Baird analyst Ben Kallo also downgraded the stock to Neutral from Outperform and lowered the price target to $649, down from $816 earlier.

While GE Vernova Inc.’s (NYSE:GEV) stock has rallied during the last year, its outlook has been soured by concerns about power capacity oversupply, and as Kallo mentioned in his note, these concerns are “shifting sentiment” on the company. Some in the market believe that demand for GEV’s turbines and other equipment was mostly driven by AI-led growth, and that the company will be affected if tech companies can’t turn AI into the future success it is currently estimated to be.

However, GE Vernova Inc. (NYSE:GEV) believes that such concerns don’t capture the full picture. At its recent Investor Day event, the company’s Chief Executive Officer, Scott Strazik, addressed these concerns, saying, “AI is a real driver for us right now, but it isn’t the only driver.”

In early December, the company provided a robust outlook, projecting its total order backlog to reach about $200 billion by the end of 2028, up from $135 billion, according to a Bloomberg report. The company also guided for better profit margins in its power and electrification unit, and raised expectations for dividends and buybacks.

Following the update, several analysts reiterated their confidence in the stock, including JPMorgan, which raised its price target substantially from $740 to $1,000 and maintained its Buy rating.

GE Vernova Inc. (NYSE:GEV), a purpose-built global energy company, is a leader in the electric power industry, offering products and services that generate, transmit, convert, and store electricity. The company has three business segments: power, wind, and electrification.

READ NEXT:  12 Best Software Infrastructure Stocks to Buy According to Hedge Funds and Cathie Wood’s Stock Portfolio: Top 10 Stocks to Buy.

Disclosure: None. This article is originally published at Insider Monkey.