GE Vernova Was Red Hot in the First Six Months of 2026. Can It Keep the Momentum Going in the Second Half?

The stock of GE Vernova (NYSE: GEV) is up almost 60% in 2026 as of this writing. The capital investment boom in artificial intelligence (AI) data centers has proved stronger than the market expected going into the year, and the benefits are immediately visible in the company's guidance and backlog growth. Still, can the good run continue in 2026?

The GE Vernova investment analysis

Ultimately, the answer comes down to ongoing market conditions for investment in AI data centers (GE Vernova makes gas turbines that power them and electrification equipment essential to their operation), growth in its equipment backlog, and something called slot reservation agreements (SRAs). These events are key to the investment case for the stock and help differentiate the company from many other AI-related stocks.

First, despite being known as an equipment company, GE Vernova generates the bulk of its profit from services. The company sells gas turbines (and wind turbines) that come with long-term service agreements attached, which generally run for 5 to 25 years and "generally include maintenance associated with major outage events," according to the company's Securities and Exchange Commission filings. So the company locks in long-term services revenue as equipment deliveries grow.

Moreover, it generates service revenue from its electrification segment, as grid solutions, power conversion, and software will need upgrades and replacements over time. The good news is that across all three segments (power, electrification, and wind), its services margin is much higher than its equipment margin.

Data source: GE Vernova presentations. Table by the author.

All together, when GE Vernova increases its equipment backlog, as it did in the first quarter by reporting a $76 billion backlog, compared to a $64 billion backlog at the end of 2025, then investors need to start penciling in increased long-term earnings and cash flow from servicing gas power turbines (particularly heavy-duty gas power turbines used for data centers), and wind turbines.

Slot reservation agreements

SRAs are contracts under which customers pay up-front to secure future manufacturing slots for equipment. Their growth is a key marker of surging demand, and they increased to 56 gigawatts (GW) in the first quarter from 43 GW at the end of 2025. That increase implies more up-front cash flow for GE Vernova, and given that its billing agreements "are generally based on achieving specified milestones," it's likely to result in more near-term cash flow for the company as those milestones are hit.

Image source: Getty Images.

A stock worth buying?

As long as GE Vernova's equipment orders and backlog keep growing, the stock is likely to do well as investors price in more near-term SRAs and long-term recurring, higher-margin services revenue -- something to watch in the coming earnings reports.

Lee Samaha 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.