Why GE Vernova Stock Crept Higher on Monday
Key Points
The legacy industrial company is a go-to supplier of power generation and other electrical infrastructure for data centers.
The build-out of such facilities continues to be feverish; however, some freshly elected politicians might try to limit this.
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GE Vernova stock bucked the market's general downward trend as the trading week kicked off. Its shares ended Monday slightly higher, comparing favorably to the marginal decline of the benchmark S&P 500 index. A key reason for this was its inclusion in a researcher's list of top artificial intelligence (AI) infrastructure stock picks.
Rise of the resistance?
That researcher is Bernstein SocGen, which published a report that morning that addressed the state of the U.S. AI data center build-out. While demand remains strong for increased AI compute, Bernstein feels that 55% of the present data center pipeline could come under political pressure after the midterm elections, according to reports. In its view, certain gubernatorial candidates that favor limits on such developments, in line with some segments of their electorates, could curb the progress of numerous projects.
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That said, Bernstein believes that the significant opportunities for economic growth from data center projects could outweigh such considerations -- and politicians will, if need be, find ways to secure funding without incurring too much constituent ire. The financial services company flagged several companies that stand to benefit from this dynamic, and GE Vernova was one of them.
In fact, the company is its No. 1 pick in alternative energy and technology for this stage of the AI revolution. That's hardly surprising, as GE Vernova has established itself as a steady and reliable supplier of crucial 24/7 power systems and related services.
200 billion reasons to take notice
One crucial piece of evidence supporting this is GE Vernova's rapidly growing backlog, which, one analyst recently estimated, could easily balloon to $200 billion next year. That's a staggering amount, even for a company of this scale, and I think it's more than sufficient to drive growth, no matter how high the political pressure gauge rises.
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Eric Volkman 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.
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