Shareholders struck gold but can GE Vernova and Siemens Energy keep it up?
AI data centre demand is often cited as their share prices soar – or sometimes plunge – but analysts say there is far more to electrification's power couple
Over the last 12 months, at time of writing, Siemens Energy’s shares are up by a whopping 269% in Frankfurt while New York-listed GE Vernova’s have shown 198% growth. Stellar figures like those have investors asking two questions: is there more to come or is the bubble going to burst?
Headlines around the success of these energy-facing scions of venerable industrial conglomerates – spun out of Siemens and the former General Electric – have often focused on their positioning to meet the surging demands of power-hungry data centres.
That is, for sure, a major part of the story. The spike in data centre power demand has been one of the biggest talking points in global energy over the last two years. The International Energy Agency (IEA) reckons data centre demand will more than double by 2030 to 945TWh as the need for power hungry AI services explodes.
In an ideal world, most would agree that green power should fill that gap. In reality, grid constraints, the size of the loads involved and delays bringing enough renewables through fast enough mean the most obvious winner has been gas, with utilities and ‘hyperscaler’ data centre operators rushing to place orders for turbines to meet the needs of the sector.
Siemens Energy CEO Christian Bruch has said it could look to meet up to 20% of global data centre energy demand growth, and the German group and GE Vernova have both been piling up gigawatts of reservation deals for their gas turbines linked to the sector.
Deep Seek: Sign of trouble ahead?
That concern proved to be short lived, and their stocks soon resumed their upward trajectory. Despite some ups and downs – and both have seen dips this week – and macroeconomic challenges such as the the tariff and energy policies of Donald Trump, GE Vernova and Siemens Energy stocks are up about 54% and 82% respectively in 2025 to date.
But was Deep Seek a warning sign over seeing the power couple only through the lens of AI?
Gas in general has moved from being seen in the early 2000s as a “sunset industry” doomed to soon be replaced by renewables to one with a major role to play in global electrification.
Strazik told investors in April that of its 21GW of gas turbine 'slot reservations', not yet in its backlog but expected to convert into firm orders, “about a third are direct to data centre projects. The other two-thirds are everything else that is happening in the world right now. We have electrification growth for more than just data centers”.
“It’s not just the sale of gas turbines," said Donen. “What's particularly important here is that the useful life of a gas turbine is, let's call it between 10 to 20 years. And during that period, Siemens Energy, and it's the same with GE Vernova, will be performing the servicing of this equipment.”
Donen reckons that servicing is worth about 65% of the total revenue reaped from a gas turbine sale.
“So, there's actually quite a bit of visibility there now. In the past, it was this low single-digit margin business, largely because of the lack of demand for gas turbines, which then meant there wasn't as much service revenue. So it's volume, and it's… increased profitability too.”
And then there is the grid, in which both players have a major presence. “Within the grid technology segment, you've got the need to replace outdated infrastructure. And that's prevalent globally, in Europe, particularly,” said Donen of Siemens Energy.
More broadly “there’s more electricity demand because of electrification, which isn't reliant just on data centres [if] you look at a lot of industrial sectors that are trying to electrify. Electric vehicles are one that just requires more electricity, which requires both expanding capacity, grid capacity, [and] having more high-voltage electrical cables and transformers.”
When you put the need to modernise the grid to cater for renewables into the mix, Siemens Energy and GE Vernova both look well placed in some of the biggest growth stories of the energy transition, as Donen and other financial analysts have noted.
Bank of America in June raised its target price for GE Vernova to $550 (as of writing it is at $499) noting surging US power demand growth. “We now forecast US electrical demand to grow at a 2.5% CAGR over 2024-35. This translates into approximately 1,000GW of gross power generation capacity additions over this period. We expect roughly one-third of these additions to be natural gas turbines, or [about] 330GW over 2024-35,” BofA told investors.
HSBC analysts meanwhile said of Siemens Energy: “We believe this company is riding the wave of a supercycle with a compelling long-term story.”
Wind power the problem child
Apart from thriving gas and grids businesses, the power couple have another thing in common – wind turbines. As the other units press on, their wind operations have proved a challenge to both Siemens Energy and GE Vernova. In the case of the former the problems have been driven by quality issues at Siemens Gamesa that in 2023 setback the prospects for the whole group, while the US company has been battling losses in offshore.
Analysts note that both companies are slowly but surely getting to grips with their wind challenges, positioning them as key players in a global industry set for strong volume expansion over the next decade.
Morningstar’s Donen cautions, however, that while the number of turbines going into the global ground and seabed is set to boom, the competitive landscape will remain tough, not least because of the increased ambitions of Chinese players.
“I think the [wind] story over a longer term is still there, but there's less visibility on the profitability of these businesses than what you've got for some of Siemens Energy's other segments.”
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