NextEra Energy (NEE) is acquiring Symmetry Energy for $800M and plans to reopen the Duane Arnold nuclear plant by 2029.
NextEra trades at 26.7 times trailing P/E and offers a 2.7% dividend yield.
GE Vernova has surged 335% since March 2024 on turbine demand driven by AI data center power needs.
If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire earlier than expected. take 5 minutes to learn more here
The AI tailwinds have really powered energy stocks over the past year, thanks to a looming surge in demand driven by new AI data centers coming online. Undoubtedly, it’s not just the energy companies with AI data center partnerships in place that have won big. Even the heavy-duty machinery suppliers (think the turbine makers), vital for power production, have benefited greatly. Undoubtedly, the AI tailwind might not be so quick to fade for the energy companies that have gained significant ground in the past year.
If AI electricity use is to rise 300% over the next decade, the utilities might be able to profit profoundly from the AI boom without having to worry about the hefty risks that come with overinvesting in the technology directly. While firms, like NextEra Energy (NYSE:NEE) do certainly stand out as lower-cost ways to benefit from the AI revolution, investors might wish to broaden their horizons as more firms, especially in nuclear, look to gain some sort of competitive advantage so that they, too, can power the boom that might still be more of a drain on the grid that originally expected.
In any case, here are two energy stocks with strong AI tailwinds and still-modest multiples:
NextEra Energy stands out as a terrific relative value play for investors with shares trading at just 26.7 times trailing price-to-earnings (P/E). The name is also a direct power generation play for investors who want to play the rise in AI-related energy consumption over the coming years.
With a recent $800 Symmetry Energy deal close to being inked, the firm’s natural gas footing looks as impressive as ever. Combined with the reopening of the Duane Arnold nuclear power plant, which is reportedly coming back online by 2029, and NextEra stands out as a long-term power play for those looking for a yield-heavier way to benefit from rising AI power demands. The 2.7% dividend yield is well-covered and is likely to grow, given NextEra Energy’s reputation as a dividend grower that hasn’t missed a year of hikes in several decades.