GE Vernova (GEV) Q3 2026 earnings review
GE Vernova raises its outlook as gas turbine deliveries jump
GE Vernova, the power turbine and grid equipment maker, grew faster and lifted its profit margins while its Wind business still lags. Sales from businesses owned a year ago rose 18%, and the company's Ebitda margin excluding one-offs nearly doubled to 15.4%. Chief executive Scott Strazik raised the full-year outlook for sales, margins and cash, and by our math the plan points to an 18% margin in the fourth quarter.
| Sales from businesses owned a year ago | +18% total revenue $12.6B (+27%) |
|---|---|
| Ebitda margin, excluding one-offs | 15.4% up 7.3 percentage points from a year ago |
| Total order backlog | $197B +$20B from last quarter |
| Full-year free cash flow outlook | Raised $4.5B to $16–17B |
⚖️ Verdict: 🟢 Bullish
The story got better because the gas factories hit their planned output jump to 5 gigawatts a quarter and converted customer reservations into firm orders. That execution pushed firm turbine backlog above slot reservations for the first time and proved the factory ramp is working. The bad news: management widened its full-year Wind loss forecast even after settling the Vineyard Wind lawsuit and booking a quarterly profit in the division.
The question now is whether the company's cash generation and capital spending can hold up if power equipment orders slow from nearly doubling. One view is that the $197 billion backlog locks in years of rising earnings; the other is that free cash flow relies on upfront customer deposits while management is spending $9 billion on another grid acquisition and buying back shares at higher prices. Fourth-quarter working capital disclosures and Trench Group deal details will tell.
🐂 Bull Case
Gas Turbine Output Hit the Target Step-Up
GE Vernova builds heavy-duty and jet-derivative gas turbines in its Power division. The company had promised to raise factory output from about 3 gigawatts a quarter in the first half to 5 gigawatts starting in the third quarter. It hit that mark, shipping 5 gigawatts of gas equipment, which drove a 25% rise in Power sales from businesses owned a year ago.
- Power orders: $21.8 billion, up 178% from a year ago on an underlying basis
- Gas equipment firm backlog: 64 gigawatts, up from 53 gigawatts last quarter
- Slot reservation agreements (paid holds for future factory slots): 58 gigawatts, down from 63 gigawatts
Customers converted 13 gigawatts of slot reservations into firm orders and signed 11 gigawatts of new contracts. That pushed firm orders above slot reservations for the first time, fulfilling a second-half goal. Chief executive Scott Strazik said the group now expects its total backlog to "exceed $200 billion in the fourth quarter, with improved margins, and to exit 2026 with at least 130 GW of gas equipment under contract", up from a 125-gigawatt target.
What to watch: the number of new factory machines installed in the fourth quarter. Hitting the year-end target of about 400 machines will show whether the factories stay on track for the next output step to 24 gigawatts a year in 2028.
Higher Turbine Prices Lifted Power and Grid Margins
Profit margins are rising across GE Vernova's two main divisions because higher equipment prices and bigger delivery volumes are outpacing inflation. Company-wide Ebitda (earnings before interest, taxes, depreciation and amortisation), excluding one-offs, reached 15.4% of revenue, up 7.3 percentage points from a year ago. Excluding the newly acquired Prolec GE transformer business and currency moves, the margin still rose 6.9 percentage points to 14.7%.
Production costs grew much slower than sales. Across the three operating segments, cost of revenues — the direct cost of making equipment and delivering services, excluding depreciation — fell by 6.8 percentage points of revenue from a year ago, by our math, while selling and administrative overhead fell by 1.0 percentage point. Power's segment Ebitda margin rose 8.0 percentage points to 21.4%, beating its 17–18% outlook, and Electrification's margin rose 4.0 points to 19.1%.
What to watch: fourth-quarter Ebitda margin, excluding one-offs. By our math, the raised full-year outlook points to a fourth-quarter margin near 17.9%, which will test whether high-priced gas and grid deliveries can offset ongoing Wind losses.
Positives this quarter didn't test
Two long-term growth drivers stayed on track or received no separate dollar update in the earnings release.
- Long-term power services wave: Power services orders grew 12% on an underlying basis and total services underlying revenue rose 6%, while the main revenue jump from servicing newly built heavy-duty turbines remains years away.
- Equipment orders from data centers: not broken out in the release after reaching $5 billion in the first half; the quarterly filing or call will show whether direct orders from computing facilities kept their first-half pace.
🐻 Bear Case
Wind Made a Profit, yet the Full-Year Loss Plan Grew
For three quarters GE Vernova kept its full-year Wind Ebitda loss forecast at about $400 million, even as first-half losses reached $657 million. In the third quarter the Wind division beat its breakeven outlook, earning $72 million in segment Ebitda as sales from businesses owned a year ago rose 3%. The company also "Resolved all outstanding litigation regarding the Vineyard Wind offshore wind project" in Massachusetts, retiring a legal overhang.
The company credited the quarterly profit to "lower project costs at Offshore Wind as well as the impact of tariff recoveries and higher services at Onshore Wind". Yet in the same release, management worsened the full-year Wind Ebitda outlook to a loss of $400–500 million. Because nine-month losses stand at $585 million, by our math the new outlook still requires Wind to earn about $135 million in the fourth quarter, compared with a $225 million loss a year ago.
What to watch: fourth-quarter Wind segment Ebitda. Any fourth-quarter loss would push the division past the bottom of its newly widened full-year loss range.
Customer Down Payments Carry the Cash Flow
GE Vernova generated $5.4 billion of free cash flow in the quarter, up from $0.7 billion a year ago, and raised its full-year free cash flow forecast by $4.5 billion to $16–17 billion. That cash haul is nearly three times the quarter's $1.9 billion of Ebitda excluding one-offs, and more than four times its $1.3 billion of net income.
The gap exists because customers make large upfront payments when they sign equipment orders and slot reservations. The company noted that cash flow rose on "higher positive benefits from working capital and stronger adjusted EBITDA". Because free cash flow relies heavily on these down payments, a slowdown in new turbine bookings would shrink cash generation long before revenue or profit margins fall.
What to watch: the contract liabilities line on the balance sheet when the quarterly filing arrives. A smaller inflow from customer prepayments would show how much cash the business generates from completed work alone.
Buyback Pace Rises With the Share Price and M&A Expands
Finance chief Ken Parks said the growing cash balance gives the energy group confidence in "making high-growth, accretive investments and returning cash to shareholders". In October the board doubled the share buyback plan to $20 billion. The company spent $1.6 billion to buy 1.7 million shares in the third quarter — about $941 per share by our math, well above its $635 life-to-date average — and spent another $1.3 billion in the first three weeks of October.
At the same time, GE Vernova agreed to buy Trench Group, "a global leader in high-voltage grid equipment", for $9.0 billion, with closing expected in late 2027. That deal follows February's $5.3 billion buyout of the remaining half of transformer maker Prolec GE, adding a second multi-billion-dollar grid integration during a peak in equipment demand.
What to watch: Trench Group's standalone revenue and profit margins when management details the deal on the call. Those figures will show the price paid relative to the target's current earnings.
Risks this quarter didn't answer
Four standing concerns depend on footnote or call disclosures that are not in the earnings release.
- Customer concentration and framework deals: whether major computing customers signed multi-year turbine framework agreements or still buy project by project.
- Dollar value of slot reservations: the 58 gigawatts of reservations sit outside reported backlog, and their dollar value and deposit terms remain undisclosed.
- Prolec GE purchase accounting: acquisitions added $945 million of revenue and $210 million of Ebitda in the quarter, while final goodwill and integration charges await the quarterly filing.
- General Electric tax audit: any update on the tax authority audit of legacy General Electric returns from 2016 to 2020 lives in the filing's tax footnote.
👓 Other Themes
Retiree Benefit Transfer and Credit Upgrade
GE Vernova signed deals to transfer part of its retiree benefit obligations to an insurance company, which will take over full legal and administrative responsibility, and paid about $350 million in the quarter for the transfer. Separately, ratings agency Fitch upgraded the company's credit rating to A- from BBB+ with a stable outlook in August, following last year's upgrades.
💲 Other KPIs
Total backlog — remaining performance obligations on firm equipment and service contracts — rose by $20 billion from last quarter and 45.6% from a year ago, by our math. Growth sped up from 37% last quarter and 32% in the first quarter, led by Power and Electrification equipment bookings.
Cash on hand rose by $3.7 billion from last quarter and more than doubled from $7.9 billion a year ago. The increase came from $5.4 billion in free cash flow, partly spent on $1.6 billion in share buybacks and $350 million to transfer retiree benefit liabilities.
Spending on property, plant, equipment and software rose to 5.1% of revenue by our math, up from $386 million last quarter and $247 million a year ago. The group is expanding factory capacity in Power and Electrification under its $6 billion spending plan for 2025 through 2028.
Reported profit for the first nine months rose from $1,209 million a year ago, lifting diluted earnings per share to $24.81. That figure includes $4,481 million of one-time gains from buying and selling business stakes, mainly the accounting gain on Prolec GE; excluding those gains, nine-month net income was $2,206 million by our math.
🔮 Guidance
Raised. The middle of the range moved up $1.0 billion to $47.0 billion, or 23.5% growth for the year by our math. By our math, that leaves $13.9 billion for the fourth quarter, or 27.0% growth from a year ago. It is the third raise in three quarters: +$0.5B, +$1.0B, +$1.0B.
Raised. The middle of the range moved up 1 percentage point to 14.0%, up 5.6 points from last year. Because the margin for the first nine months was 12.4%, by our math the plan requires a fourth-quarter margin of about 17.9%, up from 15.4% in the third quarter. Moves over the last three quarters: +1.0 pt, 0.0 pt, +1.0 pt.
Raised. The middle of the range jumped $4.5 billion to $16.5 billion, more than four times last year's $3.7 billion. Because nine-month free cash flow is already $15.3 billion, by our math the plan leaves $1.2 billion for the fourth quarter, down 34% from a year ago. Third straight raise: +$1.75B, +$5.0B, +$4.5B.
Raised. The middle of the range rose 1 percentage point to 20% underlying growth. With nine-month underlying growth at 17%, by our math the outlook points to about 26.1% underlying growth in the fourth quarter as higher gas turbine output continues. Moves across the last three quarters: 0 pt, +2 pts, +1 pt.
Raised. Management lifted the range by 2 percentage points to a 20% middle, after the division delivered 21.4% in the third quarter and 19.0% over the first nine months. Moves over the last three quarters: +1 pt, 0 pt, +2 pts.
Unchanged. The plan still includes about $3.1 billion from Prolec GE. With $10.5 billion booked in the first nine months, by our math the middle of the range leaves $4.3 billion for the fourth quarter, or 45.0% growth from a year ago. Moves over the last three quarters: +$0.5B, +$0.5B, $0.0B.
Raised. While the 18–20% bracket stayed the same, the group now expects to finish near the 20% top end, after printing 19.1% in the third quarter and 18.5% for the first nine months.
Raised. The division now expects underlying sales to fall about 5% for the full year, better than the previous plan for a roughly 11% drop, after third-quarter underlying sales rose 3% and nine-month sales fell 9%.
Cut. The expected full-year loss widened by $50 million at the middle of the range to $450 million, even though Wind earned $72 million in the third quarter. With nine-month losses at $585 million, by our math the plan still requires a $135 million profit in the fourth quarter.
❓ Key Questions
What turns Wind profitable in the fourth quarter?
Nine-month Wind Ebitda is a $585 million loss, so the new $400–500 million full-year loss plan requires about $135 million of fourth-quarter profit by our math. Last year Wind lost $225 million in the fourth quarter.
What are Trench Group's current sales and profit margins?
GE Vernova agreed to pay $9.0 billion for the high-voltage grid equipment maker, closing in late 2027, but the release gave no revenue, Ebitda, or backlog figures for the business.
How much did customer down payments add to cash flow?
Third-quarter free cash flow of $5.4 billion was nearly three times Ebitda excluding one-offs. In the first half, $13.7 billion of contract-liability inflows drove the cash haul.
What is the dollar value of the 58 GW slot reservations?
Slot reservation agreements make up nearly half of the 122 gigawatts of gas equipment under contract, yet they sit outside reported backlog and carry no disclosed dollar value or cancellation terms.