Fund Manager: Wall Street Is Using the Wrong ‘E’ to Judge AI Valuations

Fund Manager: Wall Street Is Using the Wrong ‘E’ to Judge AI Valuations Ian Cooper Wed, June 24, 2026 at 7:45 PM GMT+2 4 min read NVDA CEG GEV ETN VRT Quick Read GEV turbine pricing doubled to $2,500/MW with a record $150B backlog while NVDA operating income surged 147%, yet consensus models still underestimate both. Crawford argues sell-side linear models can't capture an exponential capex cycle, leaving Street EPS estimates systematically too low across the entire AI supply chain. Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks.

See the full list FREE now . On a recent episode of the Animal Spirits podcast titled Talk Your Book: AI Is Not a Bubble, Alger portfolio manager Dr. Ankur Crawford made a deceptively simple argument that cuts against most of the current debate over AI valuations: investors are arguing about the price-to-earnings ratio without first agreeing on what the earnings actually are.

TippaPatt / Shutterstock. com "The first thing you need to get right when you think about valuation is the E. Only then can you come up with a PE," Crawford said.

She runs a concentrated 30-name portfolio and targets companies she believes can double or triple over a roughly three-year horizon. She contends that sell-side models are linear extrapolations bolted onto an exponential capex cycle, leaving Street estimates "just too low" across the AI supply chain. The Case Study: GE Vernova Crawford pointed to GE Vernova ( NYSE: GEV ) as the cleanest illustration.

Only three companies make combined-cycle gas turbines globally, GE Vernova holds roughly a third of that market, and pricing has doubled from about $1,250 to $2,500 per megawatt in under a year as hyperscalers scramble for firm power. The financials support the framing. Q1 2026 revenue came in at $9.

34 billion, beating the $9. 3 billion consensus, while organic orders jumped 71%. The Electrification segment booked $2.

4 billion in data center equipment orders in a single quarter, more than all of 2025. Backlog hit a record $150 billion at year-end 2025 and grew $13 billion sequentially in Q1. CEO Scott Strazik told investors the company expects to reach at least 110 GW of combined gas turbine backlog and slot reservations by year-end 2026.

Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now . The stock has run hard, up 72.

84% year-to-date and 132. 18% over the past year, trading at a forward P/E of 40x. Crawford's point is that this multiple is built on consensus EPS, and consensus has missed Vernova's revenue every quarter shown in the data, with beats ranging from 0.

36% to 9. 17%. The Picks-and-Shovels Backlog The same pattern shows up across the AI power buildout.

Vertiv Holdings ( NYSE: VRT ) posted Q4 2025 organic orders growth of 252% year over year, lifting backlog to $15. 0 billion, and has beaten EPS estimates by between 4. 62% and 25.

01% across three quarters. Eaton ( NYSE: ETN ) saw Electrical Americas' trailing 12-month organic order growth accelerate from 7% in Q3 2025 to 42% in Q1 2026, with electrical backlog up 48%. Story Continues On the generation side, Constellation Energy ( NASDAQ: CEG ) closed the Calpine acquisition in January 2026, expanding total supply to 93,330 GWhs and reaffirming 2026 adjusted operating EPS guidance of $11.

00 to $12. 00. The company is targeting 20%+ base EPS growth through 2029, anchored by long-term PPAs with Microsoft, Meta, and CyrusOne.

And Where NVIDIA Fits The compute layer tells the same story. NVIDIA ( NASDAQ: NVDA ) reported Q1 FY2027 revenue of $81. 615 billion, up 85.

23% year over year, with Data Center revenue of $75. 246 billion and Data Center Networking up 199%. CEO Jensen Huang called the moment "the largest infrastructure expansion in human history.

" EPS has beaten consensus for four straight quarters, with the margin widening from 3. 96% to 5. 42%.

That is Crawford's "wrong E" in a sentence. Revenue growth is accelerating from 55. 6% to 85.

23% while consensus models assume moderation, and operating income is compounding faster still, up 147. 42% in Q1 FY2027 on margin expansion. What Investors Should Watch Co-host Ben Carlson noted on the podcast that most investors are still asking, "Is it too far too fast?

" while Crawford is focused on the underlying business fundamentals, not the stock price. The Department of Energy projects data centers could account for up to 12% of U. S.

electrical demand by 2028, a structural backdrop that informs why turbine pricing, backlog visibility, and Power Purchase Agreement (PPA) economics matter more than trailing P/E ratios. Reddit sentiment on Vernova has slipped to neutral-to-bearish over the past month as retail investors fixate on the price chart, the exact gap between price action and earnings power that Crawford says creates opportunity. Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks.

See the full list FREE now .