Eaton CEO Ruiz Signals Stronger Data Center Outlook at Morgan Stanley Laguna Conference

Wall Street analysts are sharply divided on GE Vernova, with price targets on the power and grid technology company spanning from $470 to $1,450 a share. GLJ Research analyst Gordon Johnson recently initiated coverage with a sell rating and a $470 price target, about 50% below the stock's recent trading price of around $940 and below its 52-week low of $530 hit last November, citing a roughly 39-times forward earnings multiple he considers unjustified for a cyclical company. Guggenheim's Joseph Osha holds the Street-high target of $1,450, nearly 55% above the recent share price, based on hyperscaler demand for transformers and gas turbines, margin expansion from a higher-priced backlog, and multi-decade cash flow from long-term service agreements. The average analyst price target is over $1,200 a share, and of the nearly 40 analysts covering the stock, 30 rate it a buy or higher while all others except Johnson rate it a hold. The company's orders surged 88% in the second quarter to $24.2 billion, it booked $5 billion of data center orders in the first half, and its gas power equipment backlog and slot reservation agreements grew to 116 GW from 100 GW, with CEO Scott Strazik expecting 125 GW by year-end.

Microsoft's Azure cloud business crossed $100 billion in annual revenue for the first time, with commercial remaining performance obligations reaching $678 billion, up 84%, giving the company multi-year revenue visibility as it heads into fiscal 2027. Azure grew 43% year over year in the fourth quarter, and management guided to roughly 45% growth in constant currency for the first quarter of fiscal 2027, while Microsoft 365 Copilot passed 30 million paid seats and GitHub Copilot revenue accelerated over 60% quarter over quarter. The bull case is tempered by a capital expenditure cycle that saw full-year capex balloon to $115.95 billion, up 79.62% year over year, with calendar 2026 capex expectations translating to roughly $175 billion and fiscal 2027 capex set to grow again. Free cash flow fell to $66.99 billion for fiscal 2026, down 6.46%, with fourth-quarter free cash flow dropping 23.2%, and cash and equivalents fell 30.78% to $20.94 billion. Microsoft trades at $493.78 against a consensus analyst target of $572.92, implying roughly 16% upside, with a forward P/E of 25 and a rating mix of 52 buy-equivalent calls versus 3 holds and no sells, while the stock is up 2.75% year to date and down 2.08% over the past year, trailing the S&P 500's 11.7% year-to-date return.

Amazon and Alphabet are on pace to deploy close to $400 billion in AI infrastructure this year, with both cloud arms accelerating in Q2 FY2026. AWS posted $42.23B in revenue, up 37% year over year, its fastest growth in 18 quarters, with operating margin at 39.4% and backlog of $496 billion, while Google Cloud jumped 82% to $24.77B with a $460B backlog. Amazon guided 2026 capex to roughly $200B and Alphabet to $175B-$185B, and Alphabet's long-term debt rose from $46.5B to $98.2B with buybacks suspended in Q2. CEO Andy Jassy said data-center servers take a little less than three years to break even, meaning much of the 2026 buildout monetizes into 2028 and beyond, and consensus fiscal 2027 EPS sits at $10.47 for Amazon on about $947B in revenue and $14.86 for Alphabet on about $612B. Alphabet trades at a forward P/E of 23 with a $428.16 analyst target, while Amazon carries negative $7.6B in trailing free cash flow and shares are up just 9.72% over the past year versus 39.05% for Alphabet.