GE Vernova gains AI halo as stock targets climb
Plus, Ursula von der Leyen's new EU team leaves climate priority hanging
In today’s edition:
— GE Vernova stock has more than doubled since it was spun off from General Electric in April
— EU’s new leadership team keeps Dutch climate chief, but puts green priorities in play
— Scientists are testing a form of geoengineering outside of San Francisco
— PG&E wins approval for fourth rate increase in the past year
— AI is transforming how we use data collected by satellites, World Economic Forum says
When GE Vernova GEV 0.00%↑ was spun off from parent company General Electric this past April at $115 a share, it instantly became the largest clean energy company in the U.S. That wasn’t enough for investors though, as its shares fell 14% from their first-day pop to $142 as fund managers digested its debut.
Since then, however, the shares have been on a one-way ticket to ride, especially in the past week after an analyst at Jefferies initiated coverage of the stock with a $261 price target. They traded Tuesday as high as $240, having not had a significant correction since their listing. That includes the week that an errant wind turbine blade from the company washed up this summer on a Nantucket beach.
Of course, that only means a correction is even more overdue. But for investors who have suffered in the clean energy space in the past few years because of startups suffering interest rate and supply chain programs, GEV has been a rare success story.
As big tech companies increasingly pressure the largest U.S. electric grids for more energy to feed their AI efforts, GEV is in a unique position to lead the way in making sure that energy comes from renewable sources. Now that the AI gold rush has begun to wear off on stocks such as Nvidia NVDA 0.00%↑ and Microsoft MSFT 0.00%↑ , the halo effect is beginning to spread to the companies who will provide the energy it needs.
Investors will be closely watching GEV shares ahead of its quarterly earnings report on Oct. 22. The company reported a profit of more than $1.2 billion in July in its first quarter as a public company, on revenue of more than $8.2 billion, essentially flat from the year before when it was still held by General Electric.
The issue is its wind business, which is about a quarter of its overall portfolio, along with a power business and an electrification business, and which lost money in the last quarter. The company said at the time that it expected the wind business to be “approaching profitability” by the end of the year.
How that plays out will likely determine whether GEV shares finally correct to the point where value investors might come in later this year, or whether they continue racing right up to the Jefferies target and beyond. One research group, at Bank of America, sees just that, having slapped a $300 target on the stock Tuesday morning.
Don’t forget to contact me directly if you have suggestions or ideas dcallaway@callawayclimateinsights.com.
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EU’s new leadership team keeps Dutch climate chief but puts green priorities in play
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