Elon Musk's AI data centers acquiring gas turbine companies to meet extreme power demands that exceed grid capacity.
The greatest bottleneck to the build-out of artificial intelligence infrastructure isn't chips—it's power, according to Elon Musk. To underscore the point, Musk's company Space Exploration Technologies recently acquired APR Energy, a power-delivery company serving data centers, utilities, and industrial firms, for $1 billion. The acquisition underscores a fundamental mismatch: power demand now exceeds supply, presenting significant opportunities for companies benefiting from the surge in gas-powered AI data centers.
This dynamic is exemplified by GE Vernova (NYSE: GEV). When the company's operations were part of General Electric, gas turbines—its core product—faced serious long-term headwinds due to renewable energy growth. Electrification infrastructure was similarly viewed as low-growth, dependent on maintenance capital spending for mature electricity networks in developed economies.
By 2026, soaring power demand has fundamentally reshaped the business. The company's backlog of remaining performance obligations (RPO) demonstrates strong end-market demand, with management projecting RPO will reach $200 billion in 2027.
Demand runs so deep that GE Vernova now signs Slot Reservation Agreements, in which customers pay cash upfront to secure future production capacity for gas turbine equipment. During the company's recent earnings call, CEO Scott Strazik disclosed that the power backlog grew from 44 to 53 gigawatts while SRAs expanded from 56 to 63 gigawatts in the second quarter alone. He projects at least 125 gigawatts under contract by year-end, with SRAs converting to orders and driving backlog expansion.
Beyond turbine sales, the real earnings engine lies within the power segment: high-margin service revenue from Long Term Service Agreements attached to equipment sales. Each new turbine installation expands the company's installed base, generating long-term earnings and cash flow.
The electrification business—encompassing grid solutions, power conversion, and storage—is experiencing robust demand from both traditional utilities and data center operators desperate for power capacity. This segment is a significant earnings contributor. Wall Street analysts are modeling 17% earnings growth for 2026 and 30% for 2027, according to Yahoo! Finance.
GE Vernova's onshore wind operations remain profitable, while the company continues working through loss-making offshore wind contracts that may turn profitable in the future.
Valued at 32 times estimated 2026 earnings, GE Vernova is not inexpensively priced, requiring faith in sustained power demand from AI infrastructure and beyond. Yet if Musk's $1 billion bet on power infrastructure signals anything, investors are in experienced company. As long as orders and backlogs continue expanding, so will the installed base—and with it, profit expectations over the long term.