Gas Turbine Q2 Orders Hit Record Levels, Driven by Dual Surge in Large Models and Data Center Demand

Overview

This quarterly tracking report comprehensively reviews the latest orders, capacity planning, pricing trends, and installation forecasts in the global gas turbine industry. The core conclusion is that the industry is in a historic peak demand cycle: Q2 2026 global orders hit a new record, driven jointly by the US market, advanced large units, and behind-the-meter power demand fueled by data centers. Although major OEMs have announced expansion plans, the report argues their pace remains disciplined, and given persistently rising project costs and strong forward demand, the supply side will maintain a tight balance in the medium term. Based on this, the institution maintains its Overweight ratings on key players in the industry chain.

Core views

Total order volume and structure both hit records: Global gas turbine orders reached approx. 38GW in Q2 2026, up 71% YoY and 29% QoQ, representing the strongest single-quarter performance on record. At this trend, full-year FY26 order intake is expected to reach around 120GW (with H1 already at 67GW). Structurally, the US remains the absolute main market, contributing approx. 18GW in orders (YoY +49%). More importantly, orders for H/J class advanced units, representing the highest technological level, reached 19.8GW, a YoY surge of 93%, significantly outpacing the overall market, indicating explosive growth in high-end demand. Competitive Landscape and Segment Highlights: The top three giants (Siemens Energy, GE Vernova, Mitsubishi Heavy Industries) collectively held about 77% of the market share in Q2, maintaining a stable landscape. Specifically, Siemens Energy secured 12.5GW, GE Vernova secured 11.3GW, and Mitsubishi Heavy Industries secured 5.3GW. Of particular note is the performance of Caterpillar's subsidiary, Solar Turbines, whose Q2 orders skyrocketed to 2.8GW, far exceeding recent quarterly averages. Approximately 1.9GW (86 units) came directly from data center customers. These orders are expected to be delivered in Q2/Q3 2027, strongly proving that behind-the-meter (BTM) solutions with short delivery cycles have significant window-of-opportunity potential amidst data center power gaps. It also indicates that BTM is not cannibalizing large unit demand; rather, the two are resonating. Capacity Expansion Path and Supply Discipline: Addressing market concerns about overcapacity, the report calculates that global OEM effective capacity (simple cycle basis) will steadily rise to approx. 85GW by 2028. Although GE Vernova and Mitsubishi Heavy Industries recently announced further expansion intentions for 2030 and beyond (which could push capacity beyond 95GW+ post-2030), these long-term plans currently do not require substantial capital expenditure commitments but rather respond to long-term demand. The report emphasizes that major players repeatedly mention "discipline" in their expansion rhetoric, and current capacity increases are mainly to digest backlog orders rather than blindly grabbing market share, making the probability of malignant oversupply low in the short term. Surging Project Costs Coexist with Demand Resilience: Despite strong demand, the rise in construction costs cannot be ignored. J.P. Morgan's North America Natural Gas Power Pricing Tracker shows that the median capital expenditure for combined cycle (CCGT) projects based on a 2031 startup date has increased by approx. 200% compared to 2025; even for simple cycle plants, the cost for 2028 startups rose 50% compared to 2025. Channel research feedback indicates that total costs for CCGT projects coming online in the early 2030s are pushing towards the $2800-$3000/kW range. However, high costs have not deterred buyers; instead, they confirm the rigidity and urgency of electricity demand, especially in data centers and grid reliability sectors, where customer price sensitivity yields to the pursuit of power certainty.

Analysis framework

The report employs a combination of high-frequency data tracking and multi-source cross-validation. First, by aggregating quarterly order data publicly disclosed by various OEMs, it builds a global gas turbine order database, structurally splitting it by region, model grade, and application scenario to identify structural drivers of demand growth (e.g., distinguishing traditional utility demand from emerging data center demand). Second, in capacity analysis, rather than relying solely on company guidance, it combines wording from earnings conference calls, historical capacity utilization rates, and capital expenditure rhythms. It converts all manufacturers' published "combined cycle" metrics into comparable "simple cycle" metrics, distinguishing between "confirmed expansions" and "long-term intentions," thereby more objectively assessing real supply elasticity over the next 3-5 years. Finally, using its proprietary North America Natural Gas Power Project Pricing Tracker (covering 78 public projects), it quantifies the impact of inflation, supply chains, and labor costs on end-user prices, and compares cost curves with order trends to judge demand sustainability in a high-price environment. This full-chain verification from orders to prices forms the data foundation for the bullish thesis.

Methodology notes

• Industry/Industrial Analysis FrameworkVolume-price decomposition

  Decomposing industry revenue or order growth into volume-driven and price/cost-driven factors

  The report not only tracked the growth in order MWs but also separately monitored changes in cost per kW. This method helps investors distinguish whether industry prosperity stems from genuine demand volume increases (volume growth) or merely inflated amounts due to inflation (price growth). In this report, the conclusion of rising volume and price strengthens the assessment of industry prosperity.

• Industry/Industrial Analysis FrameworkSupply-demand framework

  Judging supply-demand gaps by comparing the pace of effective capacity expansion with order absorption capacity

  In heavy asset manufacturing, capacity release often lags behind order explosions. By standardizing OEM expansion plans into 'simple cycle' metrics and excluding non-binding long-term plans, the report constructed a more precise supply-side timeline, arguing that despite expansion announcements, the medium-term supply-demand dynamic remains tight.

• Industry/Industrial Analysis Framework

  Conversion between Simple Cycle and Combined Cycle Capacity Metrics

  Gas turbine manufacturers disclose capacity using different metrics (some include steam turbines and heat recovery steam generators, others only include the gas turbine body). The report uses a 1.5x factor to convert simple cycle to combined cycle, or vice versa, to ensure data from different manufacturers and time periods are comparable on the same baseline. This is a technical detail to note when reading industry data.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• GE Vernova (GEV)

  Core Beneficiary: As one of the top three OEMs, it directly benefits from the explosion in H/J class unit demand and increased output due to its own efficiency improvements.

  Strengths

  Clear heavy gas turbine capacity planning, targeting ~24GW by 2028; factory efficiency improvements bring additional incremental output.

  Weaknesses

  The 30GW target for 2030 triggers market sentiment regarding long-term supply oversupply.

  Comparison

  Compared to Siemens Energy, GEV expresses more optimism about efficiency potential; compared to Mitsubishi, it has greater exposure to European and American markets.

  Risks

  Delivery delays due to supply chain bottlenecks; if long-term expansion is executed too quickly, it may suppress later-stage pricing.

• Siemens Energy (ENR GR)

  Core Beneficiary: Leading in Q2 orders, with clear plans for large gas turbine capacity expansion.

  Strengths

  Secured 12.5GW in Q2, ranking first; emphasizes expansion discipline, focusing on profit quality.

  Weaknesses

  Previously suffered a 9% stock price drop due to GEV expansion news; market sentiment is sensitive.

  Comparison

  Order volume slightly higher than GEV; capacity disclosure is in combined cycle terms, requiring conversion for comparison.

  Risks

  Changes in European energy policy affecting domestic demand; wind power segment dragging down overall profitability expectations.

• Caterpillar (CAT) / Solar Turbines

  Differentiated Beneficiary: Leveraging small and medium-sized units and short delivery cycles to precisely position itself in the data center behind-the-meter power market.

  Strengths

  Q2 orders exceeded expectations (2.8GW), with a very high proportion of data center orders, filling the delivery gap for large units.

  Weaknesses

  Small single-unit capacity, unsuitable for replacing large baseload power stations.

  Comparison

  Significant advantages in the BTM niche, complementing rather than directly competing with the top three OEMs.

  Risks

  Slowdown in data center construction or technology route shifts (e.g., towards storage/nuclear).

• Argan (AGX)

  Supporting Beneficiary: As an electric power engineering contractor, it benefits from rising gas power plant construction costs and increased project volume.

  Strengths

  Rated Overweight, directly linked to North American gas power construction prosperity.

  Risks

  Risk of project delays or cancellations; labor cost overruns eroding profits.

Key data

• Q2 Global Gas Turbine Orders~38GWRecord single-quarter high, YoY +71%, QoQ +29%
• H/J Class Advanced Unit Orders19.8GWYoY +93%, significantly increasing share of global orders
• Solar Turbines Q2 Orders2.8GWData centers account for approx. 1.9GW, deliveries scheduled through Q2/Q3 2027
• 2028 Global OEM Capacity Estimate~85GWSimple cycle basis; expected to rise to ~95GW+ post-2030
• North American CCGT Project Cost Increase+200%Median cost for 2031 startup projects doubled compared to 2025
• FY26 Full Year Order Forecast~120GWProjected based on H1 67GW and current trends

Impact & implications

For gas turbine equipment manufacturers, record orders and highly visible production schedules imply extremely strong revenue certainty for the next 2-3 years, and a product mix tilting towards high-value-added H/J class units helps support profit margins. Although raw material and construction costs have risen sharply, the downstream clients' urgent need for power supply allows for smooth price transmission mechanisms, with no significant demand destruction observed. For data center developers and electric utilities, the report reveals that the window for securing power is narrowing: while behind-the-meter power can provide short-term buffering, large-scale baseload power still relies on long-cycle combined cycle projects and must bear higher capital expenditures. This may lead to assets with existing grid connection capacity or those who locked in equipment slots early gaining scarcity premiums. For capital markets, the report believes that market fears of "long-term overcapacity" are overstated. Since expansion is disciplined and actual demand (especially AI-driven computing power) continues to accelerate, current valuations do not fully reflect the sustainability of the industry super-cycle, and relevant targets still hold allocation value.

Risks

• Renewable energy penetration exceeds expectations, squeezing long-term space for gas-fired power generation (BNEF forecasts significantly lower than EIA).
• If OEM long-term expansion plans land centrally, they may trigger capacity oversupply and price wars after 2030.
• Continued surges in project costs may cause some marginal projects to be delayed or canceled.
• Supply chain disruptions or shortages of key components affecting actual delivery rhythms.
• Data center power demand growth falls short of expectations or breakthroughs in energy efficiency technologies reduce electricity intensity.

What to watch

• Subsequent quarterly order conversion rates and visibility changes in order books for each OEM.
• Specific timing of capital expenditure implementation for GE Vernova and Mitsubishi Heavy Industries' 2030 expansion plans.
• Whether actual signing costs for North American natural gas power projects break the $3000/kW threshold.
• Sustainability of data center behind-the-meter power orders and operational feedback after delivery.
• Direction of revisions by third-party institutions (EIA/BNEF/McCoy) in forecasts for new US gas power installations.