Key Takeaways
- Elon Musk posted on Nov. 6 that “SoftBank is defaulting on their turbine orders,” as SoftBank’s stock fell 45% in a month on its AI bets.
- SoftBank said in May that it had reserved turbines from makers including GE Vernova for a 9.2-gigawatt gas plant in Ohio, but Musk didn’t say whose orders are at risk.
- Turbines are scarce enough that GE Vernova can likely resell a lost slot, but its margins and analysts’ estimates depend on AI buyers paying higher prices every year.
- GE Vernova trades at 33x forward earnings, its lowest in a year, and its fourth-quarter report will show whether gas pricing holds.
GE Vernova (GEV) has sold its gas turbines years in advance, and buyers have paid more for each one. Now one of its AI customers may be backing out.
AI stocks have sold off since Democrats won both chambers of Congress on Tuesday, and GE Vernova fell with them. SoftBank was hit even harder. Its stock fell 11% in early trading on Friday after a 14% drop on Thursday, leaving it down 45% in a month. As Reuters reported, investors are now paying more to insure SoftBank’s debt than at any point in four years.
Elon Musk then added a new worry in a reply on X: “SoftBank is defaulting on their turbine orders.”
That one matters for GE Vernova. SoftBank said in May that it had reserved turbines from makers including GE Vernova for the 9.2-gigawatt gas plant its SB Energy unit is building in Ohio to power an AI data center campus.
For a stock that has run on a sold-out backlog, that’s an uncomfortable post.
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Someone else will take the slot
Musk didn’t say whose turbines SoftBank ordered or how many. Neither SoftBank nor any turbine maker had confirmed a cancelled order as of Friday. Even if every gigawatt of the Ohio plant were GE Vernova’s, it would be well under a tenth of the 122 gigawatts of gas equipment the company had under contract at the end of September. As of the second quarter, about 20% of its contracted gigawatts served data centers, spread across about 100 customers in 26 countries. Management has also said that deposits on both orders and slot reservations are nonrefundable.
Plenty of buyers would want any slot SoftBank gives up. On Cipher Digital’s third-quarter call on Nov. 2, CEO Tyler Page was asked how Cipher would get the equipment to turn gas from its planned pipelines into power. He said that equipment is “one of the really hard things to secure.”
“There just aren’t enough turbines and reciprocating engines in the world,” he added.
Buyers have been paying up
The bigger risk for GE Vernova is the price the next buyer pays. That backlog is behind three guidance raises this year, and analysts expect revenue to climb from $38.1 billion in 2025 to $61.3 billion in 2028:
That 2028 figure is already above management’s own target of at least $56 billion.
Price is a big part of that growth. GE Vernova’s CEO said on the Oct. 28 call that 2026 gas orders will be priced about 50% higher per kilowatt than 2025’s. Those orders are only now starting to show up in profit. Last December, he said the equipment business wouldn’t earn material profit until the third quarter of 2026, when the higher-priced orders begin to ship. Its operating margin rose from -5.9% in 2022 to 5.6% in 2025 even before that:
The buyers most willing to pay up are the ones racing to get data centers running. Page said tenants are willing to get creative because getting power sooner is worth so much to them. If AI developers find it harder to raise money, they’ll be the first to push back on price. Management already expects fourth-quarter gas orders to carry a lower price per kilowatt, which it puts down to a mix of fewer aeroderivative units and more 50-hertz ones.
Priced for buyers who keep paying
The market has already marked the stock down. GE Vernova trades at 33x forward earnings, its lowest in a year and well below its 54x average over that time:
But that multiple is based on estimates that analysts raised by more than a third over the past year, and they now expect $37.11 of normalized EPS in 2028.
The way I see it, SoftBank walking away wouldn’t hurt GE Vernova’s backlog much: the deposit stays, and the slot finds a new buyer. But the stock and those estimates assume buyers keep paying more every year. The AI developers who’ve been paying the most are now the ones investors are turning against. I’d wait for proof that pricing holds before buying.
GE Vernova’s fourth-quarter report, likely in late January, will show us whether gas contracts reach the at least 130 gigawatts management expects by year-end, and what buyers paid for them.
So what is GE Vernova stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
