Wednesday's Morning Movers: CRWV Upgrade, RKLB New Contract, GEV Earnings

[00:00:00]But for more on some of these moves right out of the open for these individual equity stories, we're now joined by Diane King Hall, host for the Schwab Network. And so Diane, GE Vernova delivered yet another quarter that highlighted the enormous demand that we are seeing tied to power generation and broader AI infrastructure, but what's your biggest takeaway right out of the gate from this report?

[00:00:20]>> Good question, Jenny, and good morning to you. I think the biggest takeaway is there was a high bar coming into this today's report and the stock up more than 50% uh year-to-date. So it had to clear a high bar in order for any momentum to continue and when you think about the stock's performance on a year-over-year basis, the stock was up more than 90%.

[00:00:40]Today pulling it back uh despite beating expectations at least on one metric and demand is still there. Strong demand there. Tariffs though also a headwind for this company. Now, revenue did climb 22% to more than $11 billion. That was a beat. Earnings came in weaker than expected. EPS coming in at $2.47 per share. The street was looking for $3.13.

[00:01:04]They did raise their full-year revenue and free cash flow guidance for a second quarter in a row. So there is continued strength in the power and electrification business. Now, wind was weaker, but there was the expectation that we would see some weakness in wind in its wind business here. Uh for let's go through some of the good news. Uh additionally, orders surged to 88% organically. Its backlog now a record at 176 billion. They're now expecting 2026 revenue Jenny to come in at between 45.5 to 46.5 billion. That's a billion higher roughly than its previous outlook here. They also dramatically increased their free cash flow forecast. Uh that forecast now 11 and 1/2 to 12 and 1/2 billion. To put that in perspective, the forecast previously was 6 and 1/2 to 7 and 1/2 billion. But again, the bar clearly high coming into its results. Power and electrification still shining here. So, powering up their power generating more than a billion in core profit. That's up more than 30% more than 31% year over year. In fact, electrification nearly doubling. Uh management say that there is accelerating electric demand. That is obviously from this AI compute in the increasing need for that from data centers, grid upgrades, broader electrification. The story there continues. The weak spot is wind. We were expecting that coming into it.

[00:02:27]Revenue fell in that division about 10%.

[00:02:30]But again, that's its weaker uh piece of the puzzle. But, tariffs are a troubling point. And we know tariffs are back on the table. We've been hearing about that whether it's uh country-specific or sector-specific. Management is now expecting global tariffs to increase costs by 100 to 200 million next year.

[00:02:48]There are some cost mitigation cost recovery efforts they're trying to effort. Uh but again, that is a headwind right now.

[00:02:54]>> Okay. And so, then shifting gears away from some of the the earnings moves, but Ture is upgrading Coreweave even while trimming its price target arguing that demand for AI compute should keep rising as enterprises move towards open models and sovereign AI. And so, Diane, walk us through what was a pretty mixed call today.

[00:03:10]>> Uh they're I would say they're turning a little bit more bullish. Yes, they're pulling back their price target a little bit, but still upside from here. They're moving off the sidelines to buy. This is Ture as we mentioned from a hold. They think that that recent pullback we watched, you can see it in the chart, has created an attractive entry point from here. Their price target is cut to 126, but again, still upside from here.

[00:03:34]Uh roughly, you know, uh 50% or more than 50% upside from uh yesterday's closing levels.

[00:03:42]The suggestion is that the recent sell-off was overdone. There was the CEO we just showed a picture of. Shares had fallen over the past 3 months. Uh they're below their 52-week high, about 50% below that 52-week high. Investors had been concerned about the debt load over at Coreweave. That's been one of the troubling, uh, sticking points.

[00:04:02]Recently, uh, also those Meta plans, as you, uh, talked about there. That's been a headwind with Meta planning, uh, to sell excess AI compute capacity. We've been talking about that headline for some time. That raised some fears around Coreweave and its positioning. Uh, but Truist says that recent sell-off is essentially gone too far. They point to AI demand. They say it's broadening.

[00:04:24]They think that is a tailwind for Coreweave. The valuation looks compelling, especially with the recent pullback. And they also think margins could improve. So, they see upside from here. We're seeing the stock react real time as it increases throughout the first, uh, minutes of trading here.

[00:04:39]We're now better by almost 3 and 1/2% >> Okay, now to look at another move to the upside and what is definitely not really a mixed call by any means is Rocket Lab, now up about 3.6% here after winning a $266 million Space Force contract for some of these suborbital launches. And so, walk us through the details here and what has been, I mean, a really strong performer this year that has pulled back. And so, now looking for some perhaps some moderation as we've pulled back now 52, 53% nearly from highs in this name, Dan.

[00:05:09]>> Yeah, but right now Rocket Lab rocketing higher by more than 3%. This is off the back of it landing that major US defense contract. It won a $266 million Department of Defense contract to provide a dozen suborbital rocket launches with the potential for half a dozen additional launches if the options are exercised. The missions will launch from Alaska. They're scheduled to run through the end of 2028.

[00:05:36]Uh, those are those suborbital launches, excuse me, that travel into space before brief briefly before returning to Earth. Uh, used to test hypersonic technologies, missile defense systems, and other military uh, efforts here. Essentially, high-speed test flights. Obviously, Wall Street likes this. It shows that it's expanding beyond commercial satellites. It's a major win for Rocket Lab, clearly, the view of Wall Street.

[00:06:01]>> And like you said, rocketing higher this morning. I liked that that that pun there. And so, seeing at least some nice price performance right out of the gate this morning. But so appreciate it, Dan King Hall, for all that breakdown and some of these key equity movers to keep on your radar for this Wednesday.