11 Best Utility Stocks to Invest in According to Hedge Funds

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1. Vistra Corp. (NYSE:VST)

Number of Hedge Fund Investors: 112

Topping our list of the Best Utility Stocks to Buy Now is Vistra Corp. (NYSE:VST), the largest competitive power generator in the US. The company boasts a capacity of approximately 41,000 MW, powered by a diverse portfolio that includes natural gas, coal, nuclear, solar, and battery energy storage facilities.

On December 16, Morgan Stanley analyst David Arcaro raised the firm’s price target on Vistra Corp. (NYSE:VST) from $225 to $228, while keeping an ‘Overweight’ rating on the shares. According to the analyst, the performance of the utility sector will be heavily driven by data centers and growth upside next year, given the rapidly increasing demand from the ongoing AI race between hyperscalers. The analyst favored utilities with exposure to data center demand growth, and cautioned against companies facing heavy affordability scrutiny, given that 2026 is an election year.

In another positive development for the stock, it was revealed on December 2 that S&P has upgraded Vistra Corp. (NYSE:VST) to investment grade. VST’s long-term rating was raised from BB+ to BBB-, driven primarily by the utility’s deal to sell power from a nuclear plant, its purchase of natural gas assets, and strong hedging of future production.

That said, on December 16, JPMorgan analyst Jeremy Tonet trimmed the firm’s price target on Vistra Corp. (NYSE:VST) from $249 to $233, but kept an ‘Overweight’ rating on the shares. The revision comes as the firm updated the company’s model following the Q3 report, in which Vistra fell below estimates for both earnings and revenue.

While we acknowledge the potential of VST to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than VST and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: Retirement Stock Portfolio: 11 Energy Stocks to Buy and 14 Best Utility Dividend Stocks to Buy Now.

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