:max_bytes(150000):strip_icc()/INV_GEVernovaBellRingingatNYSE_GettyImages-2126120824-18d1043be0a84c60b12570fe4134b4d3.jpg "GE Vernova Stock Hits Record High Amid AI Power Demand Optimism")
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Key Takeaways
- Brokerage firm William Blair initiated coverage on GE Vernova Thursday with an “outperform” rating.
- Analyst Jed Dorsheimer told clients that because of soaring demand for energy to power artificial intelligence technology, more natural gas and natural gas turbines will be needed.
- The analyst said GE Vernova is in the best position to benefit from service contracts for turbines.
- GE Vernova gained 4% on Thursday and hit a new record high.
GE Vernova (GEV) shares jumped Thursday to their all-time high after William Blair analyst Jed Dorsheimer initiated coverage of the power-generation equipment and services company with an “outperform” rating, citing the demand for energy to run artificial intelligence (AI) products.
Dorsheimer wrote in a note to clients Thursday that “the reality behind AI” is that natural gas and gas turbine power are “underappreciated.”
He added that renewable energy sources aren’t capable of producing the electricity needed to supply the grid for this burgeoning demand, and that natural gas is the “pragmatic” answer. He said his firm believes GE Vernova “is best positioned to benefit as the energy sector reverts back to pragmatism and quietly walks back from the 100% green idealism.”
GE Vernova Seen Benefiting from Aging Turbines
Dorsheimer said that the natural gas turbines currently in use are aging, and because of the call for more electricity, power plants are running harder and past scheduled retirement. He argued that that fact benefits GE Vernova, whose service contracts for the machines act as recurring revenue.
Dorsheimer said in the research report that using two ways to analyze the valuation, GE Vernova’s share price should be $216.
Shares of GE Vernova, which was created in April when the old General Electric divided into three separate companies, gained 4% on Thursday to close at $191.36, after moving as high as $195.68 during the session.
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