NEW YORK, July 22, 2026 – GE Vernova (NYSE:GEV) raised its full-year free cash flow forecast by $5 billion on Wednesday, but the stock reversed earlier gains and fell approximately 4.5% in premarket trading near $1,030. The market's reaction shifted focus from robust demand to the composition of the cash flow improvement.
First-half free cash flow reached $9.9 billion, representing 82% of the new midpoint guidance of $12 billion. However, contract-liability inflows—primarily customer down payments and turbine slot reservations—totaled $13.7 billion, exceeding the company's entire operating cash flow of $10.7 billion. These inflows finance future work but do not contribute to current-period profit, raising questions about the sustainability of the cash flow upgrade.
Demand remained powerful. Second-quarter orders surged 88% organically to $24.2 billion, compared to $12.4 billion a year earlier. The backlog expanded to $176.3 billion, up $13 billion sequentially. Revenue rose 22% to $11.1 billion, slightly above the Wall Street estimate of roughly $10.8 billion.
Management raised its revenue forecast to $45.5-$46.5 billion but kept its adjusted EBITDA margin range unchanged at 12%-14%. This split suggests the cash flow upgrade reflects working capital timing rather than an equivalent profit reset. The prior free cash flow range was $6.5-$7.5 billion.
CEO Scott Strazik said, “Our momentum is building,” noting that the company expects at least 125 gigawatts of gas equipment under contract by year-end. Annual turbine output should reach 20 GW this quarter, with targets of 24 GW in 2028 and 30 GW in 2030.
Power segment orders jumped 134% organically to $16.7 billion, with EBITDA margin expanding to 18.8%. Electrification's margin widened to 18.4%. Wind remained a drag, posting a $275 million loss versus a $165 million loss a year earlier.
Despite the strong headline numbers, adjusted EBITDA of $1.25 billion slightly trailed expectations near $1.3 billion. The shortfall mattered given the stock's steep advance this year. Data-center orders exceeded $5 billion year-to-date, more than double the full-year 2025 total, but investor focus turned to cash conversion.
Valuation remains demanding. At the preliminary price, GEV trades at roughly 42 times 2027 earnings, compared to Quanta Services (NYSE:PWR) at 39 times, leaving a premium of about 9%. Risks include wind losses expected around $400 million this year, potential tariff costs of $100-$200 million, and the non-recurring nature of the customer advance boost.
The upcoming earnings call will test management's ability to address pricing, capacity, and cash normalization. With orders already surging, the market appears to be demanding more than just strong demand.
