News Analyst
GE Vernova can help meet the massive energy demands of artificial intelligence, according to Wells Fargo. The company initiated coverage of the energy company with an overweight. Its $385 price target implies an upside of more than 12% from Wednesday’s close. The company was spun off from General Electric earlier in 2024, alongside other GE assets. Analyst Michael Blum said strong AI-related energy demand could make GE Vernova a key beneficiary, particularly because subsequent construction will require an upgrade to the power grid. Specifically, the analyst believes that gas will be the most demanded form of energy in the future, which could translate into an 8% compound annual growth rate for GE Vernova over the next eight years. GEV YTD mountain GE Vernova stock. “As electricity demand increases and distributed generation is added to the mix, aging grids will require significant investments to manage an increasingly complex and dynamic environment,” Blum said. “GEV, HVDC transformers [High-voltage direct current]and networking software offerings are well positioned to benefit from this growing demand. » Blum expects electricity demand to grow at a compound annual growth rate of 3% from 2024 to 2032. The analyst also noted that GE Vernova trades at a discount to the S&P 500 The stock trades at a forward price-to-earnings multiple of 9.9, per FactSet, while the broader market index trades at 24 times forward earnings. “We expect high levels of demand. for its generation and networking product line, and we believe the company has strong potential to expand its margin through pricing increases and lean production,” Blum said.
https://www.cnbc.com/2024/11/21/wells-fargo-says-ge-vernova-is-a-buy-as-ai-energy-demand-grows.html
