GE Vernova Places High-Voltage, $9 Billion Bet on Energy Equipment

The winner of the AI race is a gas turbine maker. GE Vernova, one of three companies that spun off from the dissolution of 132-year-old conglomerate GE in April 2024, was a balance sheet albatross in the years leading up to its spinoff.

Then, the AI boom turned that on its head. On Wednesday, GE Vernova said it will spend a $9 billion mix of cash and debt to buy high-voltage grid equipment maker Trench Group in an effort to accelerate a voltaic breakout.

In the Trench

When General Electric ended its life as a conglomerate and split into three companies, the hope was that its constituent parts would return better value for shareholders on their own. But the strongest expectations sat with crown jewel GE Aerospace, which got to keep the original stock ticker and its juggernaut 40% share of the commercial jet engine market. GE Healthcare took the reliable, cash cow medical-technology business, which turned out the laggard of the group due to supply chain costs and Chinese competition.

But the odd firm out was GE Vernova. GE’s power and renewables division was for years a multibillion-dollar drag on the conglomerate’s bottom line. There were multibillion-dollar bad bets on wind power, huge losses on fixed-price contracts and an all-time dud of a deal in its purchase of Alstom’s energy assets that led to a $23 billion write-down. Those days are no more. After its April 2024 spinoff, GE Vernova emerged as a pure-play beneficiary of the AI boom. Its gas turbines suddenly became key to supplying hyperscalers with the power needed to run data centers. Utilities have clamored for the transformers and switchgear it makes, which are necessary to connect data centers to the electrical grid. Orders soared to $29.3 billion in the third quarter, up 96% year over year, the company reported Wednesday. Backlog grew $20 billion to $197 billion. Trench, which it’s buying from European private equity group Triton Partners, will add to it:

• Already a GE Vernova supplier, the Berlin-based manufacturer produces high-voltage power transmission components that are used in the majority of the world’s high-voltage direct current lines. Its manufacturing footprint spans 13 countries, including the US, and its $1.4 billion revenue is expected to grow by double digits for the next few years.
• Trench has a backlog of nearly $5 billion, the companies said, with some already booked for the 2030s. And GE Vernova CEO Scott Strazik said the company projects the global high-voltage market that Trench works in to be worth $130 billion by the end of the decade.

Buyback Boast: GE Vernova’s third-quarter $12.6 billion revenue and $2 billion EBITDA surpassed analyst estimates, though its shares slid 1.8% Wednesday. Like many stocks tied to the AI trade, it’s dealt with turbulence this month due to fears about financing and political backlash against data centers. But the stock is still up 33% this year and management signaled they’re plenty confident on Wednesday, announcing they’ve doubled buyback plans from $10 billion to $20 billion.