As the US economy shifts into high gear, its thirst for electricity is set to surge, driven by the proliferation of data centers, electric vehicles, and artificial intelligence. By 2035, the nation’s power grid may need to accommodate an additional 300 gigawatts of capacity, representing a significant opportunity for select utility companies.
A recent analysis suggests that the country’s electric demand is poised to grow at an annual rate of 1.5%, outpacing the 0.5% growth rate seen between 2015 and 2024. This uptick is attributed to the resurgence of domestic industry, the expansion of data and crypto mining centers, and the widespread adoption of electric vehicles and infrastructure.
Among the key beneficiaries of this trend are five national utility stocks: Sempra, Northwestern Energy, Pinnacle West, Entergy, and TXNM Energy. These companies are well-positioned to capitalize on the growing demand for electricity, driven in part by the increasing adoption of artificial intelligence, which is expected to require an additional 28 gigawatts of capacity by 2026.
Entergy, for instance, is expected to gain 3.6% from current levels, driven by its role in the emerging AI data center buildout and its efforts to expand the power-charging grid for electric vehicles. Sempra, meanwhile, is poised to rise 13% based on its significant investments in supporting data center growth in Texas.
Northwestern Energy could jump over 13% to reach a $65 price target, driven by improving regulatory treatment in Montana and sector-average EPS growth. Pinnacle West is expected to climb 4.6% under its price objective of $93 per share, while TXNM Energy is set to increase 10% from current levels, reaching a price target of $48 per share. As the US electric demand continues to surge, these five utility stocks are well-positioned to capitalize on the trend.
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