What GE Vernova’s new manufacturing investment means for the AI power stock
GE Vernova is bucking up to address Jim Cramer’s only gripe with a stock that has skyrocketed more than 75% this year. We’re talking about a new investment that helps the Club name deliver more heavy-duty gas turbines to meet unprecedented customer demand, which has been fueled by the insatiable energy consumption from the buildout of AI data centers. GE Vernova is planning to spend at least $41 million at its Schenectady, New York, plant to expand its generator operations and increase gas power capacity, the company announced Tuesday. The investment will go toward improvements in the manufacturing process for H65 and H84 generators, which are key cogs in the electricity generation process at power plants alongside its heavy-duty gas turbines. The turbines and generators work hand in hand to create electricity that’s pumped out into the grid. “We are committed to meeting the needs of our customers and the world as demand for electricity continues to rise at historic rates. This investment in our Schenectady facility continues our work to build gas power capacity and help meet global energy needs,” CEO Scott Strazik said in a press release. The $41 million allocation — which also create 50 new jobs at the upstate New York facility, according to the company — builds on GE Vernova’s previous $22 million investment in the same plant last year to support the manufacturing of generators. Overall, GE Vernova has pledged to make $720 million in investments into U.S. manufacturing so far in 2025. GE Vernova’s latest move to bolster its manufacturing base should come as little surprise to investors. The company is struggling to keep pace with orders for its gas turbines, which are “largely sold out” for 2026 and 2027, and “approaching filling out ’28 and starting to sign agreements for later years,” Strazik said earlier this year on a quarterly earnings call. That means it can take years for these turbines to get customers since they’re massive and complex machinery. Power segment orders for GE Vernova increased 44% organically last quarter. Overall, gas turbine orders from utilities, independent power producers and industrial players are on track to break records this year as well, according to S & P Global Commodity Insights. Why is the demand so high? The tens of billions of dollars being spent on AI computing infrastructure is creating a surge in electricity demand — following a prolonged stretch of little growth in the U.S. As a result, there’s a rush to build more power-generating capacity in the country, and turbines from the likes of GE Vernova, Siemens Energy and Mitsubishi Power are essential pieces to that puzzle. To be sure, GE Vernova’s new $41 million investment doesn’t go directly into easing the supply constraint of gas turbines because its focus is on generators. Nevertheless, the funding will prevent additional bottlenecks because generators are a crucial complement to GE Vernova’s gas turbine business, according to one Wall Street analyst. “While the focus has been on the supply limitations for gas turbines, steam turbines and generators are critical components of the overall build of materials,” Chris Dendrinos, an energy analyst at RBC Capital Markets, wrote in an email to CNBC. “The investment that GEV is making in Schenectady ensures that it continues to have the supply of generators to support the overall gas turbine business and prevent additional supply bottlenecks.” Dendrinos also called Tuesday’s announcement “material” and “a meaningful piece” of the company’s overall plan in expanding U.S. manufacturing. GEV YTD mountain GE Vernova (GEV) year-to-date performance Although GE Vernova has already made some strides to address its gas turbine shortage, this additional investment is welcome news for shareholders. It helps address Jim’s only complaint about the stock – that management should more aggressively expanding production capacity to meet demand. It’s understandable that the firm is cautious, though. GE Vernova doesn’t want to be left with excess inventory and cancelled orders again after a similar hype cycle occurred in the early 2000s around natural gas power plant construction. “I am not happy that the company has resisted adding capacity because of being burned in the past. This time is indeed different,” Jim said during the August Monthly Meeting last week. “GE Vernova is really our nation’s best hope of meeting the electric demand.” Despite our gripe, GE Vernova is still one of Jim’s favorite Club names at the moment. “Here’s a stock that almost seems to be invented for this moment,” he said last week. After all, the fervent demand for its turbines due to the generative AI boom has led to more upside for overall company sales. That was made extremely clear in GE Vernova’s stellar earnings report in July. After the release, we hiked our price target on shares by $150 to $700 apiece. The stock has been one of Wall Street’s favorite this year, its recent pullback alongside other momentum names notwithstanding. While shares have pulled back more than 11% since Aug. 6, GE Vernova is still up around 78% year to date. (Jim Cramer’s Charitable Trust is long GEV, NVDA, META, BMY, DHR. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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