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Globe and Mail
4 minutes ago
- Globe and Mail
GE Vernova's Q2 Electrifies Stock, What's Next For This Top Name?
If GE Vernova's (NYSE: GEV) latest earnings results are any indication, General Electric's corporate restructuring continues to look like a stroke of genius. On July 23, the energy equipment spin-out saw shares soar over 14% after reporting Q2 financials. As of the July 23 close, GE Vernova has provided a total return of nearly 92% in 2025. This makes it the second-best performing stock in the S&P 500 Index, behind only Palantir Technologies (NASDAQ: PLTR). Let's break down GE Vernova's Q2, which validates the bullish sentiment on the stock. Ultimately, we'll aim to answer whether investors should continue betting that the stock's huge run will continue or if it is time to take profits and look for opportunities elsewhere. GEV's Q2: This Energy Enabler Is Firing on All Cylinders In Q2, sales came in at $9.1 billion, equating to a growth rate of 11%. This figure was approximately $328 million higher than Wall Street analysts anticipated. Just as important were the increases in the company's orders and backlog, as these are strong indicators of future revenue. Orders rose by 4% to $12.4 billion, 1.4 times higher than the company's revenue in Q2. Meanwhile, GE Vernova's backlog grew 11.4% to $129 billion, 3.5 times higher than the company's expected revenue in 2025. These figures are positive signs for investors in the near and long term. Right now, sales are outpacing expectations. Orders remain substantially higher than revenues, indicating that revenue growth can continue at this pace in the near term. The company's backlog indicates that long-term revenue potential is increasing slightly faster than current revenue. This suggests that GE Vernova can maintain or even accelerate its revenue growth in the coming years. Beating sales expectations and margin improvements helped GE Vernova post earnings per share of $1.86, surpassing estimates of $1.63. Additionally, the firm increased the midpoint of its free cash flow guidance by $1 billion to $3.25 billion. This might be the most encouraging sign of all for investors. Bringing in more cash than it spends is the ultimate goal of any business, and GE Vernova is making robust progress. AI Energy Needs Are Driving Huge Wins for GEV's Natural Gas Solutions Diving further into the company's report helps explain what is driving GE Vernova's incredible success. The company's Power segment is by far its largest, accounting for around 53% of total revenue last quarter. In this segment, the company sells natural gas turbines and provides servicing. Power also offers nuclear, hydroelectric, and steam power equipment and services. Orders in Power rose dramatically by 44% last quarter. Natural gas orders nearly tripled versus Q2 2024, driving this. Utility companies must scale up their electricity generation capacity to keep up with surging demand due to artificial intelligence (AI). AI data centers need energy that is both reliable and clean. This is why so many hyperscale data center companies have signed agreements for nuclear energy. However, the availability of nuclear sites is dropping, and new sites can take a decade to build. Thus, reliable and relatively clean natural gas is a logical alternative for scaling up energy capacity. Given its leadership in natural gas turbines, GE Vernova is an ideal company for meeting the demand for AI energy here and now. GE Vernova is also working to design and build nuclear small modular reactors (SMRs). SMRs help get around the long construction times of large reactors but are still in the developmental phase. This positions the company to meet the longer-term interests of hyperscalers. Additionally, GE Vernova's scale likely gives it a competitive advantage over smaller SMR developers. GEV: Valuation Is Lofty, But So Are Its Long-Term Opportunities As of July 23, GE Vernova trades at a forward price-to-earnings (P/E) ratio of 80x. That number is likely to come down as analysts revise earnings estimates upward. However, it is still 60% above the firm's average forward P/E of 50x since April 2024. This suggests that shares could be highly overvalued. However, it's tough to argue with the company's long-term prospects, especially given the potential of its SMR business. At the same time, it's hard to say the stock's massive surge and ballooning forward P/E don't warrant taking some money off the table. Maintaining some exposure to this name while looking for cheaper opportunities elsewhere feels like a prudent balance for investors to strike. Where Should You Invest $1,000 Right Now? Before you make your next trade, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list. They believe these five stocks are the five best companies for investors to buy now...
Globe and Mail
an hour ago
- Globe and Mail
Alphabet Just Gave Nvidia Investors Some Great News
Key Points Alphabet now expects to lay out $85 billion in capital expenditures this year -- up from a previously planned $75 billion -- and expects to further accelerate that spending next year. Alphabet's AI capex will be allocated toward servers, accelerated data center buildouts, and cloud computing infrastructure. Rising AI infrastructure spending from hyperscalers such as Alphabet bodes well for Nvidia and its thriving GPU business. 10 stocks we like better than Nvidia › Over the next several weeks, companies will report financial and operating results for the second quarter of 2025. As usual, technology investors will be focused on one thing: artificial intelligence (AI). "Magnificent Seven" member Alphabet kicked things off earlier this week, reporting robust results across its search, advertising, and cloud computing divisions. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » While Alphabet shareholders should be encouraged by the internet giant's strong performance, I saw Nvidia (NASDAQ: NVDA) as the real winner from the company's second-quarter performance. Let's dig into some of the important moves Alphabet is making and assess how Nvidia is benefiting from them. Alphabet is picking up the pace on AI infrastructure construction During the Q2 earnings call, Alphabet's management updated some details of its financial guidance. Alphabet now plans to spend around $85 billion on capital expenditures (capex) in 2025. Of note, this is a $10 billion increase over the company's prior guidance. And there's more. "Looking out to 2026, we expect a further increase in capex due to the demand we're seeing from customers as well as growth opportunities across the company," said Chief Financial Officer Anat Ashkenazi. Despite its increasingly aggressive spending on AI infrastructure over the last few years, Alphabet has stated that it doesn't plan on slowing down anytime soon. This should be music to Nvidia's ears. GOOGL Capital Expenditures (TTM) data by YCharts. Why is this good for Nvidia? Management consulting juggernaut McKinsey & Company is forecasting that AI infrastructure spending could reach $6.7 trillion by 2030. And its research suggests that almost half of that money will be allocated toward AI hardware for further data center construction. In addition, research from Goldman Sachs and JPMorgan indicates that generative AI could add between $7 trillion and $10 trillion to global gross domestic product in the long run. From a macroeconomic perspective, these secular trends bode well for Nvidia's compute and networking empire. Moreover, I think that Alphabet's decision to bump up its AI infrastructure spending again adds some credibility to those industry forecasts. Alphabet's management specified that it is raising its planned capex in order to accelerate the construction of data centers and position itself to fill the rising demand for capacity on the Google Cloud Platform. Increased spending on network equipment, servers, and cloud infrastructure should lead to rising demand for graphics processing units (GPUs). I see this as a major positive development as Nvidia is still scaling up production of chips made using its latest Blackwell architecture. Considering Nvidia holds an estimated 90% share of the data center GPU market, I see Alphabet's investments in AI infrastructure as a major tailwind for the chip king and further propels the company's momentum over competition in the chip space. Is Nvidia stock a buy right now? With a market cap north of $4.2 trillion, Nvidia is currently the most valuable company in the world. While this might lead one to assume that the stock is expensive, its underlying valuation trends tell a different story. NVDA PE Ratio (Forward) data by YCharts Nvidia currently trades at a forward price-to-earnings (P/E) multiple of 40. While this isn't "cheap" by traditional benchmarks, it is notably lower than the peak levels Nvidia has witnessed during the AI revolution. What makes these dynamics interesting is that Nvidia's growth trajectory is arguably far stronger today than it was 18 months ago when its forward P/E valuation peaked. The company remains at the center of the AI revolution, providing massive amounts of fast parallel-processing power to hyperscalers and accelerating AI workloads. To me, buying Nvidia stock at its current price is a no-brainer, and I see Alphabet's rising AI infrastructure spending as a long-term catalyst that should not be overlooked by growth investors. Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025
Globe and Mail
an hour ago
- Globe and Mail
1 Reason to Buy Visa (V)
Key Points Visa is a high-quality business whose shares rarely go on sale, but that might not discourage investors from owning the stock. The company's competitive position is supported by the presence of a powerful network effect. Stablecoins have an uphill battle to put a dent in Visa's business model. 10 stocks we like better than Visa › Visa (NYSE: V) is a dominant force in the financial services industry. It runs a leading payments platform that connects consumers, banks, and merchants across the globe. The business even finds itself in Warren Buffett-led Berkshire Hathaway 's portfolio. This financial stock trades close to all-time highs, and a valid argument can be made that the current valuation isn't cheap. But this is an outstanding company that still deserves a closer look. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Here's one reason investors should buy Visa. Visa's unassailable competitive position In fiscal 2024, Visa processed 233.8 billion transactions valued at a whopping $15.7 trillion. It currently has 4.8 billion active cards that are accepted at 150 million merchants around the world. That scale is unmatched, and it demonstrates just how formidable Visa's competitive position is, which is a key reason to scoop up shares. The business benefits from an extremely powerful network effect. As the number of merchants that accept Visa grows, it's more valuable to have a Visa card. The opposite is also true, with more cardholders creating more sales opportunities for merchants. The threat of stablecoins With the passing of the Genius Act, investors might start to worry about the threat that stablecoins pose to Visa's business model. As things stand today, there's no reason to be concerned. While merchants will test the waters in an effort to cut payment processing costs, the real question of whether or not consumers will make the jump. Favorable legislation passing doesn't necessarily mean there will be mass adoption of stablecoins. People love their credit cards and the perks and rewards they offer. And a company like Visa is so ingrained in our economy, with the network effect already mentioned, as well as its deep relationships with banks and other players in the financial services industry, that it's a monumental task to disrupt it. Visa should continue to dominate the payments landscape for the foreseeable future. Should you invest $1,000 in Visa right now? Before you buy stock in Visa, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Visa wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025
