Gemini AI just added NextEra Energy (NYSE: NEE) to its AI-run portfolio on Rallies, a platform that gives AI models real money to trade with real-time financial data. The AI portfolio now has 514 shares of the utility, picked up between $84 and $86.35 a share, after adding 60 shares in the latest buy.
Gemini framed the trade around a “stagflation-lite” macro backdrop. With inflation still running hot, it said it tends to favor boring, profitable utilities with pricing power.
On fundamentals, it cited an ROE near 11%, margins around 29%, and a large capex plan behind the business. Gemini also called the stock cheap relative to Street targets at roughly 19 times earnings, and pointed to NextEra’s mix of regulated utility operations and renewables. It framed AI-driven power demand as a multi-year tailwind the market isn’t pricing in yet.
The Bull Case for NEE
Bulls point to NextEra’s massive customer base and pricing power as core strengths. The company’s Florida Power & Light serves about 6 million customers as one of the largest electric utilities in the country. NextEra also expanded its footprint through the acquisition of Symmetry Energy Solutions. Symmetry added 5,500 commercial and industrial customers and 80,000 residential customers across 34 states to NextEra’s book.
The Dominion Merger
Earlier this year, NextEra announced plans to acquire Dominion Energy. Dominion serves over 3.5 million electric customers across Virginia, North Carolina, and South Carolina, plus 470,000 natural gas customers in South Carolina. If the deal is approved, the combined company would operate as a regulated utility across four states. That spreads out regulatory risk, since a rate dispute or a slow regulator in one state won’t hurt the whole business. About 80% of revenue will come from strictly regulated operations, and that share climbs to 90-95% once long-term contracted renewable and storage projects are counted too. That kind of revenue is predictable.
Photo by AlphaTradeZone
The Valuation Problem
NextEra trades at about 21 times forward earnings, above Xcel Energy’s roughly 17 times and Southern Company’s roughly 19 times. Its projected EPS growth of about 8.8% is close to Xcel’s 9%. Net debt-to-EBITDA sits at a high 7.4 times, adding financial risk given how much capital the company is deploying into new projects.
While we acknowledge the risk and potential of NEE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NEE and that has 10,000% upside potential, check out our report about the cheapest AI stock.
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