3 Reasons GE Vernova (NYSE:GEV) Could Double by 2028

With the stock already up more than 90% in just the past year, it's difficult to believe GE Vernova (NYSE: GEV) shares could climb any higher in the foreseeable future. This is one of those occasional, rare cases, however, where what would normally seem impossible ends up being likely.

To this end, here's a closer look at the top three reasons GE Vernova could double in price again by 2028.

1. Natural gas power turbines are a huge part of AI data centers' future

This power-focused offshoot of former industrial giant General Electric makes a range of products. But none are arguably as important right now as its electricity-generating natural gas turbines.

Initially intended for power utilities, more and more of these turbines capable of producing anywhere from 34.5 megawatts to 571 megawatts' worth of electricity (100 megawatts is enough to power on the order of 50,000 homes) are being purchased by artificial intelligence data centers that want -- and need -- to take their power production needs into their own hands.

PwC expects data-center-driven demand for natural gas in the United States alone to roughly double between now and 2028, en route to eight times as much consumption by 2035. GE Vernova's chief challenge right now is simply not being able to manufacture gas turbines fast enough.

2. The backlog stands at more than half its market cap

Another key reason GEV stock could double within the next couple of years is simply that the business to support the necessary underlying growth is already lined up. As of the end of June, this company's backlog stood at $176 billion, split evenly between equipment and service.

For perspective, GE Vernova's current market capitalization is $285 billion, and it did $38.1 billion worth of business last year.

3. GE Vernova is addressing the less obvious, more ambiguous "grid" problem

Finally, it's not easy to pinpoint because it's not easy to see, but GE Vernova is making national and global power grids more efficient not only by upgrading its core components but also by improving how all these components work together. For instance, the company makes utility-scale power transformers, substation equipment, energy storage solutions, and high-voltage direct current systems to deliver power from where it's produced to where it's rerouted to customers, but it also offers the monitoring and management software to optimize all of it.

Image source: Getty Images.

This is no trivial detail either. The world's power grids are a significant bottleneck. Although only a modest 5% of electricity is lost in the transmission from the power plant to that electricity's end user, according to the U.S. Energy Information Administration, the grid itself is congested and overloaded -- because power isn't being produced where it's largely being consumed.

And yes, this problem been exacerbated by the rapid proliferation of data centers.

The first best solution? Simply establishing more capacity by expanding the grid's footprint, which is finally happening in earnest. The Edison Electric Institute (EEI) reports the nation's power utilities companies are investing a record-breaking $239 billion on the U.S. power grid this year alone as part of a $1.4 trillion spending plan through 2030. Much of this spending will, of course, be on equipment made by GE Vernova.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GE Vernova. The Motley Fool has a disclosure policy.