In this article, we will look at the 5 Best Energy Stocks Capitalizing on the Data Center Boom. Please visit the 10 Best Energy Stocks Capitalizing on the Data Center Boom if you’d like to see an extended list and methodology behind it.
5. Sempra (NYSE:SRE)
Upside Potential:14.45%
Number of Hedge Fund Holders: 51
Sempra (NYSE:SRE) is one of the 10 Best Energy Stocks Capitalizing on the Data Center Boom. On June 9, the company’s subsidiary, Sempra Infrastructure, said its Port Arthur Pipeline Louisiana Connector project has been placed in service.
The connector, with capital expenditures of less than $1 billion, includes 72 miles of 42-inch pipeline, a compressor station in Beauregard Parish, Louisiana, and associated above- and below-ground facilities.
The company said the connector provides strategic energy infrastructure in the region as it will support the safe, reliable transportation of 2 billion cubic feet per day (Bcfd) of U.S. natural gas to global markets by supplying gas to Port Arthur LNG Phase 1.
The project also interconnects with Sempra Infrastructure’s Gillis Hub Pipeline, a highly connected natural gas pipeline header system in Southwest Louisiana’s energy corridor.
In other news, Investing.com reported on June 9 that Sempra completed a $1 billion public offering of floating-rate notes due 2028. According to the report, the firm received approximately $998.5 million in proceeds after underwriting discounts, with estimated offering expenses of $1.7 million.
Sempra (NYSE:SRE) is an energy services holding company engaged in the development and operation of energy infrastructure, as well as the provision of electric and gas services.
4. Entergy Corporation (NYSE:ETR)
Upside Potential: 14.90%
Number of Hedge Fund Holders: 50
Entergy Corporation (NYSE:ETR) is one of the 10 Best Energy Stocks Capitalizing on the Data Center Boom. In an interview with CNBC on June 9, Entergy CEO Drew Marsh downplayed fears that the rise of AI data centers will increase electricity bills, highlighting its Fair Share Plus framework for large data center customers.
“The Fair Share part says that they are going to pay all of the incremental infrastructure costs during the life of their contract as needed to support them.” Marsh said.
Marsh explained that the plus part means these data center customers are also covering some of the fixed costs, such as overhead and storm costs, that our existing customers would already be paying.
The Entergy CEO highlighted that the said provisions are expected to generate around $7 billion in savings for existing customers over the 15 to 20-year life of the contracts.
On June 8, Wells Fargo analyst Shahriar Pourreza reiterated a Buy rating on Entergy with a price target of $131. Out of 27 analyst ratings compiled by CNN, 67% assigned a Buy rating to Entergy, while 30% assigned a Hold rating. The stock has an average price target of $126.50, around 15% upside from the current price of $109.66.
Entergy Corporation (NYSE:ETR) generates, transmits, and distributes electricity in the states of Arkansas, Louisiana, Mississippi, and Texas.
3. Xcel Energy Inc. (NASDAQ:XEL)
Potential Upside: 18.15%
Number of Hedge Fund Holders: 55
Xcel Energy Inc. (NASDAQ:XEL) is one of the 10 Best Energy Stocks Capitalizing on the Data Center Boom. On June 9, Truist Financial Analyst Richard Sunderland maintained a Buy rating on Xcel Energy, according to a report by TipRanks.
According to a report by Investing.com on June 8, KeyBanc reiterated its Overweight rating on Xcel Energy, maintaining a price target of $90.00 price, following a Colorado rate case settlement. The analyst highlighted that among the factors supporting the stock returning to a modest premium are its long-term earnings growth trajectory and the alleviation of several key overhangs.
For the first quarter of the year, Xcel Energy reported GAAP earnings of $556 million, or $0.89 per share, an increase from the $483 million, or $0.84 per share, in the same period last year. It also reported higher ongoing earnings of $567 million, or $0.91 per share, compared with $483 million or $0.84 per share in the same period a year ago.
Based on 22 analyst ratings compiled by CNN, 86% assigned a Buy rating to Xcel Energy, while 9% assigned a Hold rating. The stock has a median price target of $92, an 18.15% upside from the current price of $77.87.
Xcel Energy Inc. (NASDAQ:XEL) is an electricity and natural gas company operating in eight Western and Midwestern states. The company offers a comprehensive portfolio of energy-related products and services to millions of electricity and natural gas customers through its regulated operating companies.
2. GE Vernova Inc. (NYSE:GEV)
Upside Potential: 35.85%
Number of Hedge Fund Holders: 118
GE Vernova Inc. (NYSE:GEV) is one of the 10 Best Energy Stocks Capitalizing on the Data Center Boom. On June 9, Barclays cited GE Vernova as one of the companies best positioned for the 800VDC technology, according to a report by Investing.com.
While acknowledging that GE Vernova currently has limited white-space exposure, the analyst emphasized that it brings strong expertise in high-voltage equipment.
On the same day, GE Vernova’s Grid Software business launched GridOS for Transmission, a unified software solution that enables near real-time, coordinated transmission operations.
“By bringing together near real-time operations, capacity awareness, forecasting, and system stability into a single coordinated environment, GridOS for Transmission helps utilities shorten control room decision cycles, improve utilization of existing transmission capacity, and respond faster to rapidly changing grid conditions,” GE Vernova said.
The company said the operating model helps utilities reduce decision latency and operate closer to actual system limits. It also helps identify emerging stability risks earlier and respond more effectively during disturbances and peak-stress events.
Out of 40 analyst ratings compiled by CNN, 78% assigned a Buy rating to GE Vernova, while 20% assigned a Hold rating. The stock has an average price target of $1,250, a 35.85% upside from the current price of $920.15.
GE Vernova Inc. (NYSE:GEV) is a global energy company. It operates segments such as Power, Wind, and Electrification segments and is supported by its accelerator businesses.
1. Constellation Energy Corporation (NASDAQ:CEG)
Upside Potential: 51.20%
Number of Hedge Fund Holders: 79
Constellation Energy Corporation (NASDAQ:CEG) is one of the 10 Best Energy Stocks Capitalizing on the Data Center Boom. Of 22 analyst ratings compiled by CNN, 91% assigned a Buy rating to Constellation Energy, while 9% rated it Hold. The stock has a median price target of $380.50, a 51.20% upside from the current price of $251.654.
On June 9, Constellation Energy announced the completion of the spring refueling and maintenance outage at its Limerick Clean Energy Center, noting that it had invested $90 million in the effort.
In other news, the company announced on June 8 that its business unit Calpine had completed a 25-megawatt (MW) expansion project at The Geysers geothermal complex in Sonoma County, California. Constellation said the new capacity is enough to generate electricity to power over 25,000 homes annually.
Of the 25 MW expansion, the company explained that 18 MW will be directed to Clean Power Alliance (CPA), while the remaining 7 MW is being supplied to MCE to support Bay Area residents and businesses.
Constellation Energy Corporation (NASDAQ:CEG) is a producer of clean and reliable energy. With 55 gigawatts of capacity from nuclear, natural gas, oil, geothermal, hydro, wind, and solar facilities, its fleet can power the equivalent of 27 million homes.
While we acknowledge the potential of CEG 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 CEG and that has 100x upside potential, check out our report about the cheapest AI stock.
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