How GE CEO Larry Culp pulled off the turnaround of the century

GE’s turnaround under CEO Larry Culp delivered outsized performance: the three standalone units (GE Aerospace, GE Vernova, GE HealthCare) generated ~30% annualized shareholder returns since 2018, compared with roughly half that for the S&P 500. GE Aerospace in particular grew revenue 19% to $45.9B with profits up 33% to $8.7B and operating margins of 21.4%, aided by a large $211B backlog and strong aftermarket “blades” revenue (70% of total; +21% in 2025). The key near-term constraint is supply-chain capacity to meet demand and customer backlogs, as Culp focuses on lean/kaizen execution and scaling supplier output.

Analysis

The cleanest takeaway is not “GE quality,” but that the bottleneck has moved from the company to the supply chain. That matters because the next leg of earnings power is less about demand and more about who can fund tooling, inventory, and working capital fastest; in that setup, GEV should keep taking share of incremental economics while sub-tier suppliers and MRO capacity providers get the real operating leverage. BA is a secondary beneficiary if engine output unblocks deliveries, but that upside is capped by its own execution risk and the fact that engine availability is only one constraint in the aircraft pipeline.

The market is likely underestimating how much of this story is already a “scarcity premium” on earnings quality. If supply constraints ease faster than expected, reported revenue can still rise while pricing power in aftermarket services normalizes, which would compress the multiple even as fundamentals improve. Over 1-3 months, the key catalyst is whether GE keeps converting backlog into billings without margin leakage; over 6-18 months, the bigger question is whether current peaks are sustainable once the production system catches up.

Contrarian view: the consensus is treating the turnaround as structurally de-risked, but the hard part is now scale, not governance. A single weak quarter in deliveries, supplier throughput, or cash conversion would likely hit GEV harder than the stock implies because expectations are stretched and the narrative is very execution-dependent. Falsifiers to watch are a slowdown in service growth, a backlog-to-revenue conversion miss, or any sign that airline demand softens enough to slow shop visitation and parts pull-through.

Key Decisions for Investors

• Stay long GEV on pullbacks; use it as the highest-quality expression of the aerospace bottleneck story, with a 3-6 month view. Risk/reward is favorable as long as quarterly delivery and margin cadence holds, but trim if FCF conversion or backlog conversion misses.
• Pair trade: long GEV / short BA into the next earnings and delivery updates. BA can benefit from better engine flow, but the cleaner economics and less balance-sheet drag sit with GEV; cover the short if Boeing starts showing sustained unit acceleration without quality slips.
• Add SAFRY only as a relative-value watch item, not a high-conviction long. If the market continues to ascribe most of the LEAP upside to GEV while ignoring the JV partner’s claim on volume growth, SAFRY could lag despite the same demand tailwind.
• No fresh long GEHC from this setup; treat it as a defensive hold rather than a catalyst name. It does not have the operating leverage embedded in the aerospace story, so it should be a lower-priority capital allocation versus GEV.
• Set an alert on any sign of supplier normalization or margin deceleration at GEV over the next 1-2 quarters. If operating margin expands less than expected while revenue still grows, the stock is vulnerable to multiple compression even before any true fundamental slowdown.