Data Center Construction Rapidly Expanding Beyond Traditional Markets
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Should l Buy VST?
Source: CNBC
- Market Shift: Texas is poised to surpass Virginia as the world's largest data market, with JLL reporting that about 64% of the 35-gigawatt construction pipeline is extending beyond traditional mature markets, indicating a significant market shift and growth potential.
- Low Vacancy Rates: Data center vacancies remained at a historic low of 1% at the end of 2025 for the second consecutive year, demonstrating strong market demand, with nearly all construction pipelines pre-committed by investment-grade tenants, thus mitigating bubble concerns.
- Surge in Capital Expenditures: The top five hyperscalers have planned capital expenditures of $710 billion in 2026, reflecting strong demand for infrastructure development, which has attracted a record $75 billion in financing, further propelling industry growth.
- Short-Term Strategy: Nuveen is adopting a build-and-sell strategy to capitalize on current strong demand while mitigating risks, with its global real estate head stating that there won't be an oversupply situation in the next five years, although long-term prospects remain uncertain.
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Analyst Views on VST
Wall Street analysts forecast VST stock price to rise
11 Analyst Rating
11 Buy
0 Hold
0 Sell
Strong Buy
Current: 176.820
Low
217.00
Averages
240.09
High
287.00
Current: 176.820
Low
217.00
Averages
240.09
High
287.00
About VST
Vistra Corp. is an integrated retail electricity and power generation company that provides essential resources to customers, businesses, and communities from California to Maine. It operates a reliable power generation fleet of natural gas, nuclear, coal, solar, and battery energy storage facilities while taking an innovative, customer-centric approach to its retail business. Its segments include Retail, Texas, East, West, and Asset Closure. The Retail segment is engaged in retail sales of electricity and natural gas to residential, commercial and industrial customers. The Texas and East segments are engaged in electricity generation, wholesale energy sales and purchases, commodity risk management activities, fuel procurement, and logistics management. The West segment represents results from the CAISO market, including its battery ESS projects at its Moss Landing power plant site. The Asset Closure segment is engaged in the decommissioning and reclamation of retired plants and mines.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Nuclear Power Purchase Agreements Milestone: The signing of a 1,200 MW agreement with Amazon Web Services and a 2,176 MW agreement with Meta brings Vistra's total nuclear capacity contracted to approximately 3.8 GW, further solidifying its market position in renewable energy.
- Financial Performance Exceeds Expectations: In 2025, Vistra achieved approximately $5.9 billion in adjusted EBITDA, surpassing the midpoint of its original guidance range, reflecting strong performance in both retail and generation segments, although some favorable factors may not recur in the future.
- Optimistic Future Cash Flow Outlook: Management projects to generate over $10 billion in cash by the end of 2027 and plans to raise the 2026 adjusted free cash flow per share target to $12.5, further boosting investor confidence in the company's growth prospects.
See More
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- Stock Fluctuation: Trump Media & Technology Group (DJT) fell 2.28% on Friday following President Trump's strong speech on Iran, despite high discussion levels on Stocktwits, indicating increased market attention but a neutral overall sentiment.
- Market Reaction: Trump's emphasis on the U.S. taking further military action against Iranian nuclear threats sparked discussions around nuclear stocks, yet DJT's retail popularity did not translate into a price increase, reflecting investor uncertainty about future developments.
- Nuclear Stock Performance: In contrast to DJT, nuclear-related stocks like Constellation Energy (CEG) ended the day up 1.95% but saw a slight decline of 0.28% in after-hours trading, showcasing divergent views on the nuclear sector's outlook.
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See More
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- Rising Storage Costs: As companies like Snap and Google Photos phase out unlimited free storage, users are facing significant increases in storage fees, with Google Cloud's 200GB plan rising from $2.99 to $4.99 per month, heightening sensitivity to storage costs and impacting consumer spending decisions.
- Surge in User Complaints: Data from PissedConsumer.com indicates a continuous rise in consumer complaints regarding cloud storage issues in 2023, with many users feeling compelled to pay to retain access to personal files, highlighting a pressing demand for transparency and service quality in the market.
- Emotional Impact Intensifies: Experts note that users' emotional attachment to personal data makes the shift to paid cloud storage feel more painful, as many worry about losing their digital history, which affects their satisfaction and loyalty towards these services.
- Shifting Market Dynamics: The monetization of cloud storage services is altering consumer habits, with traditional photo storage methods being replaced by digital solutions, leading to a decline in related industries while simultaneously creating growth opportunities for emerging services.
See More
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- Corning's New Strategy: After visiting its Kentucky factory, Jim learned about Corning's ambition to enhance data center connectivity by replacing copper with fiber optics, indicating a strong growth trajectory in the data center market that could drive future company performance.
- Eaton's Acquisition Plans: Eaton's strategy to spin off its eMobility unit and acquire Boyd Thermal aims to bolster its competitive edge in liquid cooling technology, which is crucial for managing heat in AI chips, thereby enhancing its market position.
- Alphabet and Amazon Performance: Alphabet stands out in the AI sector with its strong YouTube and cloud computing divisions, while Amazon's AWS cloud business is accelerating, although both face capital expenditure pressures, they are still viewed as solid long-term investment opportunities.
See More
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- Economic Growth Signals: Jim Cramer noted that despite core wholesale prices rising 0.8% in January, the decline in the 10-year Treasury yield reduces borrowing costs for companies, enhancing the present value of future profits, particularly benefiting growth stocks and AI-related companies.
- Strong Corporate Performance: Dell's strong fourth-quarter results and positive guidance, driven by accelerating AI server revenue, saw its shares jump over 18% on Friday, further bolstering market confidence in AI investments.
- Sustained Infrastructure Demand: CoreWeave's CEO emphasized relentless demand for AI infrastructure over the past three years; despite an 11% drop in stock price, the company is aggressively scaling to meet surging compute demands, indicating long-term growth potential in the AI sector.
See More
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- CoreWeave's Capital Expenditure Surge: CoreWeave plans to invest $30 billion to $35 billion in data center construction for 2026, significantly exceeding the Street's estimate of $26.9 billion, and despite a sharp decline in shares, nearly all new capacity is allocated, indicating strong market demand.
- Block's Workforce Reduction: Jack Dorsey's Block announced a 40% workforce cut, stating that intelligence tools have changed company operations, and despite flat revenues in 2025, Morgan Stanley upgraded its rating from hold to buy, reflecting confidence in its potential growth.
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