GE Vernova Raises Guidance, Buys Trench as Its Backlog Nears $200B

Third-quarter orders doubled to $29.3 billion and free cash flow passed a full year’s guidance in nine months, giving GE Vernova room to buy Trench and double its buyback.

Key Takeaways

• Revenue rose 27% to $12.64 billion and EPS of $4.81 beat a $4.03 consensus. Backlog climbed $20 billion to $197 billion and is now expected to pass $200 billion this quarter.
• Gas reservations are turning into firm orders. Contracted backlog rose from 53 to 64 gigawatts, Power margins reached 21.4% and the year-end target moved to at least 130 gigawatts.
• The $9 billion Trench deal, at 13 times 2028 EBITDA, buys a former Siemens Energy unit expected to earn 36% margins. 2026 free cash flow guidance rose to $16 billion to $17 billion.

The Doubt Before the Numbers

GE Vernova reported on Wednesday to a market that had started to distrust the power trade. The shares fell 11.5% in the week before the release as investors asked how the artificial intelligence buildout will be paid for. By mid-October the stock was more than 20% below its June 30 record close of $1,174.86. For a company valued largely on the length of its order book, the risk was simple. A pause in data center spending would show up first as weaker orders, and investors wanted to know whether that had started.

It has not. Third-quarter revenue rose 27% to $12.64 billion, or 18% organically, against a consensus near $12.0 billion. Net income reached $1.29 billion, almost three times the $453 million of a year earlier. Diluted earnings per share of $4.81 beat the FactSet estimate of $4.03. Orders of $29.3 billion rose 96% organically, and backlog grew by $20 billion in three months to $197 billion. Chief executive Scott Strazik now expects backlog to pass $200 billion in the fourth quarter. Six weeks ago, at a Morgan Stanley conference, he had said that would happen “very early in 2027.”

Reservations Become Orders

The Power segment carried the quarter, and the detail under its headline figures says more than the figures themselves. Orders reached $21.8 billion, up 178%. Revenue rose 25% to $6.07 billion and segment EBITDA nearly doubled to $1.30 billion. The margin widened 800 basis points to 21.4%, the clearest sign yet that prices won during the turbine shortage are now showing up in earnings. GE Vernova signed 11 gigawatts of new gas contracts, turned 13 gigawatts of slot reservations into firm orders and shipped 5 gigawatts.

That conversion is the most important fact of the quarter. Firm gas backlog rose from 53 to 64 gigawatts while reservations fell from 63 to 58. Capacity that customers once held with a deposit is becoming contracted, priced business. Backlog and reservations together reached 122 gigawatts, and management raised its year-end target to at least 130 gigawatts from the 125 it set in July. Part of the path is already visible. On October 9, after the quarter closed, Venture Global signed a frame agreement with GE Vernova and Baker Hughes for up to 16 power islands for its LNG projects and planned data centers, eight of them reserved with GE Vernova. Services orders rose 12% organically. Every heavy-duty turbine shipped today brings decades of maintenance work with it.

Cash Ahead of the Calendar

Cash flow is where the quarter went from strong to unusual. Operating cash flow was $6.06 billion and free cash flow $5.41 billion, bringing the nine-month total to $15.31 billion. That is already more than the $11.5 billion to $12.5 billion GE Vernova guided for the whole year in July. The new range of $16 billion to $17 billion implies a fourth quarter of only $0.7 billion to $1.7 billion. That reflects how the business works, not caution. Customers pay deposits to secure production slots years in advance, so the cash arrives well before the turbines leave the factory. The guidance raise is credible, but this quarter’s pace will not repeat.

The rest of the outlook moved the same way. Revenue guidance rose to $46.5 billion to $47.5 billion, and the adjusted EBITDA margin range moved up and narrowed to 13.5% to 14.5%. Nine-month adjusted EBITDA was $4.09 billion on $33.08 billion of revenue, so those ranges imply a fourth-quarter margin in the high teens. The board doubled the repurchase authorization to $20 billion. Since December 2024 the company has bought back 15.6 million shares at an average of about $635, well below today’s price. Wind is the exception. The segment produced $72 million of EBITDA and settled its Vineyard Wind litigation, but full-year guidance now calls for a loss of $400 million to $500 million.

Paying Up for the Grid’s Narrowest Point

Electrification revenue rose 51% to $3.86 billion, helped by Prolec GE, the transformer maker GE Vernova took full control of in February for $5.275 billion. Organic growth was 16% and the segment margin widened 400 basis points to 19.1%. Orders fell 9% organically, because the year-ago quarter included large synchronous condenser contracts. Book-to-bill still held near 1.4, and equipment backlog reached $42.2 billion, up 60% from a year earlier.

Trench is how management plans to build on that growth. GE Vernova agreed to buy the high-voltage component maker from Triton Partners for $9.0 billion, or 13 times expected 2028 adjusted EBITDA before synergies. It will pay half in cash and half in debt, and expects the deal to close in late 2027. Trench makes bushings, instrument transformers and coils. GE Vernova expects it to earn about $1.9 billion of revenue in 2028 at an adjusted EBITDA margin near 36%. The price makes most sense against Trench’s history. Siemens Energy, GE Vernova’s main rival in heavy-duty gas turbines, sold Trench to Triton in a deal that closed in April 2024. Reuters sources put that price in the mid-hundreds of millions of euros. Two and a half years later the same business is priced like a bottleneck, which is what high-voltage components have become. Investors will also watch the supply arrangement Siemens Energy secured when it sold the business.

A Measured Market Verdict

The shares rose between 2.5% and 4.7% in premarket trading. That followed a 4.7% gain on Tuesday that took the stock to $895.08 before the release. The reaction was firm but restrained, and the restraint tells you something. In July the stock fell about 9% after an earnings miss despite record orders, and investors have learned that a quarterly beat does not settle the bigger question. With the average analyst price target near $1,224, Wall Street’s conviction is not the issue. The open question is whether that conviction holds if AI capital spending slows.

This report gives part of the answer. Demand reaches well beyond data centers, to utilities, LNG developers, industrial customers and governments. Strazik has said he expects data centers’ share of new grid orders to fall in the second half even as that backlog keeps growing. The tighter limit is now inside GE Vernova’s own factories, which are raising gas turbine output from an annualized 20 gigawatts toward 24 gigawatts in 2028 and 30 gigawatts by 2030. A company that has sold its capacity years ahead is no longer judged on whether it can win business. It is judged on whether it can build what it has already sold, on time and at the margins it promised.