11 Most Undervalued Utility Stocks to Buy Now

4. The AES Corporation (NYSE:AES)

Forward P/E: 7.56

On February 20, Morgan Stanley lowered the firm’s price target on The AES Corporation (NYSE:AES) to $23 from $24 while maintaining an Overweight rating. The adjustment reflects broader updates to price targets across Regulated & Diversified Utilities and Independent Power Producers in North America, amid a period in which utilities underperformed the S&P 500. As the firm previews Q4 earnings, it anticipates a more balanced discussion around data center pipeline opportunities, considering affordability dynamics and evolving political considerations. Despite the modest reduction in target price, the continued Overweight rating underscores Morgan Stanley’s view that AES remains attractively positioned relative to peers, particularly given its exposure to long-duration contracted assets and renewable development pipelines.

On February 24, The AES Corporation (NYSE:AES) announced agreements to develop energy generation projects co-located with a new Google data center in Wilbarger County, Texas. These projects, along with secured powered land, will enable Google to expand its operations efficiently while advancing its energy reliability and affordability objectives. The announcement further deepens the long-standing partnership between AES and Google, with AES leveraging its development expertise to secure land and interconnection agreements and construct shared electrical infrastructure for the facility. The companies also entered into 20-year Power Purchase Agreements for the co-located generation assets, which The AES Corporation (NYSE:AES) will own and operate. In addition, AES will provide retail supply, cost optimization, and related services under a long-term energy management agreement. These long-term contracted arrangements enhance revenue visibility, strengthen AES’s position in the rapidly expanding data center market, and support durable cash flow growth.

The AES Corporation (NYSE:AES), founded in 1981 and headquartered in Arlington County, Virginia, is a global power generation and utility company that owns and operates a diversified portfolio of generation assets. It supplies electricity to utilities, industrial customers, and commercial clients.