Should Investors Take Profits in GE Vernova After Its Big Run?

GE Vernova (NYSE: GEV) stock has surged ever since it spun off from former conglomerate General Electric (now GE Aerospace).

Thanks to surging demand from data centers, GE Vernova has seen a massive boost in demand for its power equipment, catapulting the stock 674% since its spinoff a couple of years ago. The company has seen unprecedented demand for its gas turbines and grid infrastructure, securing backlog and slot reservations for years in advance.

However, after its massive run-up, is it time for investors to take profits in the industrial energy stock? Let's dive into its outlook and valuation to find out.

GE Vernova solves one of AI's biggest bottlenecks

One of the biggest bottlenecks for artificial intelligence (AI) data centers today relates to energy. Because modern data centers require significantly more power per server rack, energy demand has absolutely exploded.

According to business research firm Gartner, electricity use for data centers worldwide is projected to increase by 26% from last year. It also projects that by 2030, data center power demand will rise to 290 gigawatts (GW), up from 104 GW in 2025.

GE Vernova specializes in electricity and power generation. The company offers highly efficient, heavy-duty gas turbines that have emerged as top "behind-the-meter" solutions for hyperscalers looking to quickly power up and bypass delays in power grid interconnection.

Image source: Getty Images.

In the second quarter, GE Vernova's power segment saw organic orders skyrocket 134%, led by its gas power equipment volumes. The company saw its backlog for gas-powered equipment jump from 100 GW to 116 GW and secured 20 GW of new gas equipment contracts in the quarter. And these aren't one-off deals. Its massive backlog consists of roughly 100 customers across 26 countries, and agreements extend through 2031.

In addition, GE Vernova offers grid management technologies that support grid operations, power transmission, and electrical equipment such as power transformers. The company also develops renewable energy solutions, including hydroelectric power, wind turbines, and small modular nuclear reactors (SMRs). In total, its installed base of equipment worldwide provides 25% of the world's electricity.

Should you take profits in GE Vernova?

GE Vernova has experienced staggering growth, and early investors may be wondering if now is the time to take profits. After all, the company has surged since its 2024 spinoff from General Electric, as investors have grown more optimistic about its growth prospects.

Following the run-up, GE Vernova is priced at around 34 times its forecast earnings per share for 2026 and 30 times its forecast earnings per share for 2028. The higher valuation is pricing in GE Vernova's ability to meet this strong demand and convert it into cold, hard cash.

If you were an early investor in GE Vernova and are up big on your investment, now could be a good time to lock in some profits and reallocate to other stocks to maintain a diversified portfolio.

With that said, the company continues to grow at a staggering pace, has raised its full-year revenue guidance, and has a $176 billion backlog, giving investors plenty of reasons to stay bullish on the industrial stock in the long term.

Courtney Carlsen has positions in GE Vernova. The Motley Fool has positions in and recommends GE Aerospace and GE Vernova. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.