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GE Vernova power equipment margins projected to reach 28 percent by 2026 amid infrastructure cycle
Monday, March 23, 2026 at 05:27 PM
Bank of America analyst reports on GE Vernova management commentary regarding Service Revenue Agreements (SRAs). The company is seeing contract margins 10-20 points higher than its existing backlog. As these convert to orders and lower-margin backlog is cleared, total power equipment gross margins are projected to rise from near 0% in 2022 to approximately 28% by 2026, driven by high demand for power infrastructure.
Context
As of March 23, 2026, GE Vernova is demonstrating significant margin expansion driven by a robust power infrastructure cycle and high-demand electrification needs. Management recently noted that Slot Reservation Agreements (SRAs) are carrying contract margins 10 to 20 percentage points higher than the existing backlog. Analysts from BofA project that as these high-margin SRAs convert to orders, the cumulative improvement in power equipment contract margins could reach 28 percentage points by the end of 2026, effectively moving the segment from near 0% to 28% gross margin in just four years.
During the 4Q 2025 earnings call held in January 2026, CEO Scott Strazik stated that the company expects to add "at least as much equipment margin dollars in backlog in 2026 as in 2025," totaling at least $22 billion in equipment margin additions over a four-year period. This trajectory is supported by a total backlog that reached $150 billion at the start of 2026. This growth is increasingly fueled by data center demand and AI-driven workloads, which have prompted GE Vernova to expand its capacity and integrate AI software through the acquisition of Alteia to optimize grid and equipment performance.
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