The Data Center Opportunity Meets a Cyclical Core Business
Liberty Energy Inc. (NYSE:LBRT) is moving into natural gas-fired power generation for AI data centers as its hydraulic fracturing business struggles to turn higher revenue into higher profits. The expansion offers a possible new earnings stream, but megawatts planned for future delivery are not yet contracted revenue or cash flow.
Grid constraints and data center construction have increased interest in electricity supplied close to computing facilities. Yet permitting, emissions requirements, equipment costs, and the ability to manage peak power demand complicate the opportunity. For Liberty Energy Inc., the question is whether distributed generation can become a profitable second business quickly enough to change its earnings profile.
Liberty Energy’s expansion into power infrastructure has introduced a new dimension to its growth story, helping place the company eighth among our 10 best growth stocks under $50 to buy now. Interestingly, the seven stocks ahead of Liberty are not necessarily exposed to the same energy and infrastructure opportunities.
Oilfield Revenue Is Recovering Without Its Old Margins
Liberty Energy Inc. reported second-quarter 2026 revenue of about $1.2 billion, up 14% YoY, but adjusted EBITDA fell roughly 16% to $151 million from $181 million. Adjusted EBITDA margin compressed to about 12.6% from approximately 17%. Net income benefited from approximately $43 million in investment gains, while adjusted net income was just $14 million.
The gap is a reminder that fracturing services depend on activity levels, equipment utilization, and pricing, not simply demand for oil and gas. Morgan Stanley retained Overweight in August but reduced its price target to $30 from $32, pointing to muted fracturing pricing alongside stronger activity in some international oilfield markets. That backdrop explains the attraction of contracted power services, although it does not establish their eventual profitability.
The size of the potential market is difficult to ignore. Morgan Stanley has estimated a roughly 33-gigawatt AI power shortfall through 2028, and the linked comparison studies two suppliers trying to help close it. That projected gap provides context for Liberty’s ambitions, not a guaranteed market share.
Three Gigawatts Are Planned, Not Yet Monetized
In July, Liberty Energy Inc. announced an alliance with SLB combining modular data center infrastructure with gas-fired power. Its separate work with PowerBridge includes an initial deployment of more than 300 megawatts targeted for late 2027. The broader plan calls for approximately three gigawatts of projects by 2029, making the initial deployment around one-tenth of the stated pipeline.
The timing matters because customers must sign contracts, equipment must be deployed, and capital must earn a return before planned capacity can improve earnings. Barclays upgraded Liberty to Overweight from Equal Weight in September and raised its target to $27 from $23, expecting demand for behind-the-meter power to generate additional agreements. Piper Sandler retained Overweight but cut its target to $30 from $34, citing local opposition to data centers and questions about permits and equipment performance.
The Valuation Assumes an Earnings Rebound Not Yet Visible
Liberty Energy Inc. traded at 89.28 times estimated 2026 earnings in Seeking Alpha’s October 13 snapshot, declining to 56.10 times 2027 earnings and 14.84 times 2028 earnings at the same share price. The reduction depends on projected EPS growth of 42.69% in 2026, 59.16% in 2027, and 278.08% in 2028, a dramatic turnaround from trailing EBITDA and diluted EPS declines of 24.89% and 43%, respectively.
That contrast puts financial weight on the timing of the power rollout as well as a recovery in oilfield margins. GE Vernova’s $176 billion equipment backlog and its valuation premium offer another way to distinguish contracted demand from the growth expectations investors attach to it. Liberty has disclosed large capacity ambitions, but its future cash flows remain to be proven.
Liberty reported approximately $1.3 billion in debt and $555 million in cash as of June 30, alongside roughly $321 million in lease liabilities. Hedge fund ownership slipped from 49 to 47 funds in Q2; short interest rose to 17.4 million shares, or 14.90% of the reported float, at September 30.
Therefore, the near-term test for Liberty Energy Inc. is evidence that power projects can be financed, contracted, and delivered at attractive returns. Until then, the future earnings multiples largely express expectations for a recovery rather than profits already earned.
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