By Jack Hough
Some phrases fell out of use after the 1990s, like "take a chill pill" or "whazzuuup?" or "General Electric stock is outperforming." I'm bringing the last one back, even though there's no longer a General Electric, as such, because a three-way split of the company has richly rewarded investors. I'm pretty sure it hasn't gone entirely according to plan -- some clues in a moment.
First, background: There used to be a company called General Electric, formed when a banker with more influence than personal wealth, named J.P. Morgan, forced a client with more inventions than profits, named Thomas Edison, to merge his electric company with a Schenectady, N.Y., lighting outfit that had more commercial momentum than star power.
What followed was just over a century of parlaying profits into new business lines, like washing machines, turbines for jet engines and power plants, medical-imaging machines, and some weird ones near the end, like show business and subprime mortgages. Then came a quarter-century of getting rid of most of those businesses, starting with the weird ones.
Despite the streamlining, shareholders who stuck with GE for 20 years as of Nov. 8, 2021, lost 38% while the S&P 500 made 524%. The following day, the company announced it would split into three. Investors who bought shares then and held on to each of the spinoffs have made more than 600%, beating the S&P 500, Bitcoin, and Nvidia.
Management predicted that GE HealthCare Technologies would be the fastest growing of its three companies, but it has actually been the slowest since its spinoff in early 2023, and profit margins have been lower than planned. Trade tensions with China have weighed on demand, and hospitals have been cautious on big-ticket purchases while watching for changes to Medicare reimbursements. GE HealthCare has since returned 42%, or about half as much as the S&P 500.
Next came a spinoff of energy businesses in April 2024 into something called GE Vernova. What was left were the prized jet engine and related businesses. These were renamed GE Aerospace and kept the ticker symbol GE. Sales growth and profit margins there have both been better than promised. Global air traffic is healthy and growing. There is a multiyear backlog for jumbo jet orders, which means there's a multiyear backlog for engines. Analysts say U.S. airlines appear poised for a prosperous 2026. I don't believe a word of it, which historically has been a strong indication that it could actually happen.
Now, GE Vernova. Four years ago, it was thought the ugliest child of a family not known for its looks. Management predicted minimal sales growth. It described its thinly profitable gas turbines as "stabilizing" and seemed to want to call more attention to windmills.
Initially, GE referred to the business as Renewable Energy & Power, and when it unveiled the name Vernova in 2022, the explanation went on like a juice bar enthusiast with too much to say about antioxidants: a "combination of 'ver,' derived from 'verde' and 'verdant,' to signal the greens and blues of Earth, and 'nova,' from the Latin 'novus,' or 'new,' reflecting a new and innovative era of lower-carbon energy that GE Vernova will help deliver."
Instead, what Vernova is delivering are gas turbines the size of houses, as many as it can make, at ever-higher prices, with a backlog that's approaching the end of the decade. The popular explanation for this is that artificial intelligence is driving demand for electricity, and firing up more natural gas is the easiest way for utilities to meet demand. That's part of it, and the AI glow might help explain why shares are up about 400% since the spinoff. But there's a larger factor. "We actually estimate that electrification of the U.S. economy and specifically buildings -- residential, nonresidential -- is the single largest driver of electricity demand growth," says Andrew Obin, who covers Vernova for BofA Securities. "Data center, the way you should think about it, it's the straw that broke the camel's back."
Here's an example of electrification: I replaced my home's oil heating with a series of electric heat pumps and fluid loops that run deep underground. Now I pay nothing for oil, and a lot more for electricity, which comes from natural gas. It's this kind of, um, progress that Vernova is riding.
This past week, Vernova management issued blowout guidance, and shares jumped 16% in a day. BofA's Obin remains bullish, predicting 15% more upside. J.P. Morgan estimates that wind power accounts for less than 1% of Vernova's value.
Let's turn to moviemaking, and how I'm about to take it over. Up until now, the only thing stopping me from making my sequel to Avengers: Endgame, for now titled Endier Game, has been a lack of Hollywood connections -- and of talent, creativity, experience, and initiative. But Walt Disney just announced a licensing deal with OpenAI and its text-to-video tool, Sora. Soon, users will be able to turn their ideas into short movies featuring Disney characters with a quick clicketyclack of the keyboard. Disney will take a $1 billion stake in OpenAI, and receive warrants for more potential upside. It will eventually curate user videos to show on its streaming service. "We believe it allows Disney to play offense while investors, consumers, and creators ponder the impact of AI on more-traditional media forms," writes Raymond James.
Pursuing a dream with no effort isn't as easy as it sounds. At first I couldn't come up with even a basic story idea, but in a stroke of visionary passivity, I outsourced the job to Sora's famous cousin, ChatGPT. Only it doesn't seem to know yet about Sora's Disney deal, because my plot has no Iron Man or Hulk, only knockoff heroes. I can't put butts in seats with AeroSpark, Flux, Titaness, and EmberWraith. Even if I could, Sora limits videos for nonpaying users to 15 seconds, and paying ones to 25. With those run times, viewers would have to be faster than Flux to get through a medium popcorn. I'm in development hell, but if Coppola could fight for a decade to make Apocalypse Now, I can stand by Endier Game for another half-hour.
Write to Jack Hough at jack.hough@barrons.com. Follow him on X and subscribe to his Barron's Streetwise podcast.
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(END) Dow Jones Newswires
December 12, 2025 15:23 ET (20:23 GMT)
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