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GE Vernova Rallies on the AI Grid Supercycle: Turbines, Transformers, and Cash Returns
Reported by Jeffrey Neal Johnson. Published: 2/11/2026.
Article Highlights
- The Power segment is experiencing a surge in orders as data centers require reliable baseload electricity to operate continuously.
- The recent acquisition of Prolec GE strengthens the Electrification segment by securing a critical supply chain for high-demand transformers.
- Management has raised the dividend and authorized share buybacks following a record year of free cash flow generation and backlog growth.
While the stock market has spent the past two years focused on microchips and artificial intelligence (AI) software, a quieter revolution has been unfolding in the physical world. The massive data centers required to run AI models have an insatiable appetite for electricity, and the aging global power grid is struggling to keep up. That gap between digital ambition and physical reality has helped fuel a rally for GE Vernova (NYSE: GEV).
Following its spin-off from General Electric in April 2024, GE Vernova has quickly established itself as a standalone industrial leader. As of mid-February, the stock is trading near $800, an all-time high. Over the last 12 months, shares have surged approximately 107%, significantly outperforming legacy industrial peers.
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See the five stocks to avoid and learn what's driving this shift.Investors are recognizing a simple reality: the AI revolution stops without the electricity to run it. By supplying the machinery to generate power and the hardware to transport it, GE Vernova has positioned itself as the utility belt of the global energy transition. The company is no longer just an industrial spinoff; it's becoming the primary infrastructure play for the next decade of digital growth.
The Cash Engine: Fueling the Data-Center Boom
The main driver behind GE Vernova's valuation is its Power segment—specifically its gas turbine business. While the world shifts toward renewable energy, sources like wind and solar are intermittent: the sun doesn't always shine, and the wind doesn't always blow. Yet major technology firms' data centers require baseload power around the clock. To bridge that gap, utilities and independent power producers are turning to natural gas turbines.
That urgent demand created a seller's market in late 2025. GE Vernova's recent financial results illustrate how aggressive the buying spree has been:
- Order surge: In the fourth quarter of 2025, orders in the Power segment rose 77% organically.
- Backlog growth: The backlog for gas turbines and slot reservations jumped from 62 gigawatts (GW) to 83 GW in just one quarter. Management is explicitly targeting 100 GW by the end of 2026.
- Capacity expansion: To meet demand, the company is ramping manufacturing capacity to about 20 GW of turbines annually by mid-2026.
Utilities are not buying only for today; they are booking manufacturing slots years in advance. On Feb. 3, 2026, the company signed a Strategic Alliance Agreement with Xcel Energy (NASDAQ: XEL). This deal secures hardware capacity through the 2030s, effectively locking in revenue for the next decade. A reservation agreement with Maxim Power (TSE: MXG) shows power producers are even willing to pay to hold a place in line. The company is also selling HE (High Efficiency) upgrades, such as the recent completion at the Coryton Power Plant in the U.K., which let existing plants generate more power with less fuel.
Plugging In: The $5.3 Billion Bet on Transformers
Generating electricity is only half the battle; it must also be transported to where it's needed. The Electrification segment, which focuses on grid solutions, has emerged as the company's fastest-growing unit. Revenue in this segment jumped 36% in the fourth quarter, driven by the urgent need to modernize aging electrical grids to handle heavy loads from AI data centers and electric vehicles.
A major catalyst materialized on Feb. 2, 2026, when GE Vernova completed its acquisition of the remaining 50% stake in Prolec GE. This $5.3 billion transaction is transformative for several reasons:
- Supply-chain control: It gives GE Vernova full control over a large manufacturing footprint for electrical transformers.
- Critical shortages: Transformers are currently the biggest bottleneck in the electrical supply chain, with lead times stretching into years.
- Data-center focus: Prolec GE offers a dedicated product line for data-center power, aligning closely with the AI narrative.
The company is also expanding margins by layering software on top of hardware. The recent launch of GridBeats, a software-defined automation suite, helps utilities manage substations more efficiently. That digital shift contributed to Electrification margins expanding to 17.1% in the most recent quarter.
Profit Over Volume: Converting Headwinds into Dividends
While the Power and Electrification segments are booming, the Wind segment remains a recovery story. The segment reported an EBITDA loss in 2025 (around $600 million), driven largely by challenges in the offshore wind market, including regulatory delays at the Vineyard Wind project caused by a government stop-work order.
Investors have largely looked past these losses because management is exercising strict financial discipline. Instead of chasing unprofitable growth to inflate revenue, GE Vernova is deliberately shrinking its onshore wind backlog to focus on profitable deals. That profit-over-volume strategy is already showing early results:
- Repowering wins: In 2025, the company secured 1.1 GW of repowering orders in the U.S. onshore market.
- The logic: Repowering upgrades existing turbines with newer, more efficient components (like nacelles and drivetrains) while keeping the original towers. It is generally faster and more profitable than building new farms from scratch.
Because its gas and grid businesses are generating significant cash, the wind segment's struggles have not weakened the company's financial health. GE Vernova produced $3.7 billion in free cash flow in 2025—more than double the prior year. That cash allowed the board to take two shareholder-friendly actions:
- Dividend hike: Doubled the quarterly dividend to $0.50 per share, annualized to $2.00.
- Buybacks: Increased the share repurchase authorization to $10 billion.
These moves signal management's confidence that the cash flow faucet will remain open, despite short-term volatility in the wind business.
Pricing the Supercycle: Is the Premium Worth It?
GE Vernova currently trades at a premium valuation—about 45 times trailing earnings. While high for a traditional industrial, the market appears to be pricing in the unprecedented visibility from a record $150 billion backlog. That backlog effectively locks in revenue growth for years, insulating the company from short-term economic swings.
The AI trade has evolved. Phase one centered on semiconductors and chips (like NVIDIA (NASDAQ: NVDA)); phase two is about the infrastructure required to run them. With the integration of Prolec GE and its dominant position in gas power, GE Vernova has cemented a leadership position in phase two. Risks remain—especially around offshore wind execution—but accelerating demand for electricity suggests the company's momentum is grounded in fundamental necessity rather than speculative hype.
3 Discount Retail Stocks to Watch as Earnings Put Valuations to the Test
Reported by Chris Markoch. Published: 2/18/2026.
Article Highlights
- Discount and off-price retailers remain in focus as investors look for signals about consumer health, inflation pressures, and spending trends.
- Dollar Tree’s multi-price strategy, Ross’ expansion plans, and TJX’s potential technical rebound highlight different paths to growth.
- Elevated valuations mean upcoming earnings could be a key catalyst determining whether these retail leaders can justify their premiums.
Many investors use Walmart Inc. (NASDAQ: WMT) as the barometer for the retail sector. The company taps into both legs of the current K-shaped economy and gives investors exposure to both digital and brick-and-mortar retail. Simply put, Walmart's earnings report can move the market in a way few stocks can.
Walmart's results often set the tone for the broader retail industry, shaping sentiment around consumer spending, inventory levels and margin pressures. As the next earnings season approaches, investors are watching to see whether the strength in discount and off-price retailers can persist amid sticky inflation and shifting consumer priorities.
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The Wall Street Journal is asking whether a stock market crash is coming. Research from Weiss Ratings suggests the first half of 2026 could be very tough for certain stocks as a radical shift hits the market. Some of America's most popular names could take serious damage. Analysts have identified five stocks you should consider avoiding before this event plays out. If these are in your portfolio, you'll want to review your positions carefully.
See the five stocks to avoid and learn what's driving this shift.There are other retail stocks drawing investor attention. These companies offer different takes on the discount retail model and could provide clues about which parts of the value retail market still have room to run.
Dollar Tree: Casting a Wider Net for Future Growth
Dollar Tree Inc. (NASDAQ: DLTR) has been one of the best-performing retail stocks over the past 12 months, up roughly 77% during that span. The company operates a model aimed at budget-conscious consumers and is increasingly pushing into higher-income communities.
As Walmart's results have suggested, higher-income shoppers are looking to stretch their dollars. Rather than cede that market, Dollar Tree is expanding its footprint to capture a slice of that demand.
Despite the strong price performance, Dollar Tree must demonstrate that its strategy is driving top-line growth. Aside from a tariff-disrupted fourth quarter last year, the company has generally beaten revenue and earnings estimates; however, revenue is down sharply year over year (YOY).
YOY earnings have been positive in the last two quarters, which underscores the company's operating efficiency and its multi-price strategy that continues to roll out.
Analysts have grown more cautious. The consensus rating is a Hold, but that includes seven Sell ratings — nearly a third of all ratings. On Feb. 13, BMO Capital Markets downgraded the stock from Outperform to Market Perform and cut its price target on DLTR to $95 from $110.
Ross Stores: Positive Sentiment but Looks Stretched
Ross Stores Inc. (NASDAQ: ROST) is up nearly 23% in the last three months following a strong earnings report that beat estimates on both the top and bottom lines and showed robust same-store-sales growth. For 2026, management plans to continue expanding into underserved communities.
The company's upcoming earnings report on March 3 will be the next test. While the holiday-quarter narrative remained favorable for discount retailers, ROST may be priced for perfection — tougher year-ago comps could raise the bar to impress investors.
For now, bulls may have the edge. Institutional buying increased in the past three months, reversing the prior quarter's trend, and analysts have been raising price targets. That suggests the consensus price target of $190.94 could be conservative.
TJX Companies: Could Be Setting Up a Bullish Reversal
Of the three names here, TJX Companies Inc. (NYSE: TJX) is trading below its consensus price target. Analysts remain broadly bullish, and the company has continued to post YOY revenue and earnings growth.
The primary questions are valuation and the potential for tougher revenue and earnings comps in upcoming quarters. Institutions have sold more than they have bought over the last two quarters, which may temper the upbeat analyst sentiment.
That selling could simply be profit-taking ahead of the next move higher. Traders aggressively bought the dip in TJX around $147; the key will be whether the stock can push decisively above its 50-day simple moving average (SMA). Investors will get more clarity when TJX reports earnings on Feb. 25.
Retail Stocks Can Also Face Valuation Concerns
Talk of overvaluation has mostly centered on the technology sector, but retail stocks aren't immune. Valuation is a meaningful consideration for each of these names.
Ross Stores and TJX sit in the apparel retail sector, which has a sector average P/E of about 9.6x, according to Yardeni Research. ROST and TJX trade at roughly 31x and 36x, respectively. Dollar Tree's forward P/E is near 23x, roughly in line with the broadline retail sector average of about 24x.
Investors aren't buying these stocks at a deep discount. In the short term the market often behaves like a voting machine, and investors have clearly liked these companies' growth prospects. The key question remains whether this quarter's results will validate that expected growth.
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