Utility Stocks Poised for Strong Growth Amid AI Demand
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Source: Fool
- Utility Index Performance: The Vanguard Utilities Index Fund ETF has risen over 11% in the past 12 months, indicating strong returns for this typically sleepy sector, reflecting sustained growth in power demand.
- NextEra Energy Growth Potential: NextEra Energy's adjusted earnings per share grew over 8% last year, with 8.7 gigawatts of new generation and storage projects, and it expects to grow earnings per share at over 8% annually through 2035, supporting its plans to increase dividends in the coming years.
- Dominion Energy Investment Plans: Dominion Energy is collaborating with data centers and plans to invest $50 billion between 2025 and 2029 to support power demand, particularly in Virginia, where power demand surged 30% last year and is expected to continue growing.
- Dual Return Potential: NextEra and Dominion are expected to be the biggest beneficiaries of the AI power surge, and combined with their dividends, this will drive strong shareholder returns, making them top utility stocks to buy this month.
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Analyst Views on NEE
Wall Street analysts forecast NEE stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for NEE is 92.50 USD with a low forecast of 84.00 USD and a high forecast of 100.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
16 Analyst Rating
12 Buy
4 Hold
0 Sell
Strong Buy
Current: 88.820
Low
84.00
Averages
92.50
High
100.00
Current: 88.820
Low
84.00
Averages
92.50
High
100.00
About NEE
NextEra Energy, Inc. is an electric power and energy infrastructure company. It operates through its wholly owned subsidiaries, NextEra Energy Resources, LLC and NextEra Energy Transmission, LLC (collectively, NEER) and Florida Power & Light Company (FPL). Its segments include NEER and FPL. FPL segment is a rate-regulated electric utility engaged in the generation, transmission, distribution and sale of electric energy in Florida. FPL has approximately 35,052 megawatts of net generating capacity, over 91,000 circuit miles of transmission and distribution lines and 921 substations. The NEER segment owns, develops, constructs, manages and operates electric generation facilities in wholesale energy markets in the United States and Canada and includes assets and investments in other businesses with a clean energy focus, such as battery storage, natural gas pipelines, and renewable fuels. It owns, develops, constructs and operates rate-regulated transmission facilities in North America.
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.
Utility Stocks Poised for Strong Growth Amid AI Demand
- Utility Index Performance: The Vanguard Utilities Index Fund ETF has risen over 11% in the past 12 months, indicating strong returns for this typically sleepy sector, reflecting sustained growth in power demand.
- NextEra Energy Growth Potential: NextEra Energy's adjusted earnings per share grew over 8% last year, with 8.7 gigawatts of new generation and storage projects, and it expects to grow earnings per share at over 8% annually through 2035, supporting its plans to increase dividends in the coming years.
- Dominion Energy Investment Plans: Dominion Energy is collaborating with data centers and plans to invest $50 billion between 2025 and 2029 to support power demand, particularly in Virginia, where power demand surged 30% last year and is expected to continue growing.
- Dual Return Potential: NextEra and Dominion are expected to be the biggest beneficiaries of the AI power surge, and combined with their dividends, this will drive strong shareholder returns, making them top utility stocks to buy this month.
See More
AI Data Centers Drive Surge in Power Demand
- Surge in Power Demand: Power demand in Virginia surged by 30% due to the rise of AI data centers, prompting Dominion Energy to plan a $50 billion investment from 2025 to 2029 to support its utility operations and maintain its leadership in this rapidly growing market.
- Renewable Energy Leader: NextEra Energy achieved over 8% growth in adjusted earnings per share in 2025 and brought 8.7 gigawatts of new generation and storage projects online last year, showcasing its strong growth potential in renewable energy, with expectations of over 8% annual earnings growth through 2035.
- Major Investment Projects: Dominion's Coastal Virginia Offshore Wind project is expected to deliver nearly 3 gigawatts of power, with 50% funding from partner Stonepeak, and is on track for full completion in 2027, further driving its earnings growth.
- Shareholder Return Potential: With dividend yields of 2.5% for NextEra Energy and over 4% for Dominion Energy, combined with robust earnings growth, both companies are expected to deliver double-digit annual returns, making them top utility stocks to buy this month.
See More
NextEra Energy and Xcel Energy Sign MOU to Enhance Resource Delivery
- MOU Signing: NextEra Energy signed a memorandum of understanding with Xcel Energy to accelerate the delivery of generation resources for large load customers, including data centers, resulting in a 1.4% stock price increase on Wednesday, reaching its highest level in over three years.
- Resource Delivery Enhancement: The companies expect improved collaboration on generation, storage, and transmission investments will enable them to better anticipate system needs and quickly assess where large customer demand intersects with available grid and power assets, enhancing market responsiveness.
- Data Center Demand Growth: Xcel Energy stated that the agreement will allow it to increase the data center demand it can serve through the 2030s, reflecting a positive outlook on future market potential and further solidifying its position in the energy market.
- Formal Agreement Upcoming: Key commercial terms have been agreed upon in the MOU, with a formal joint development agreement expected to be executed in the coming months, marking a significant step in the deepening collaboration between the two companies in the energy sector.
See More
XCEL ENERGY AND NEXTERA ENERGY PARTNER TO PROVIDE GENERATION SOLUTIONS AND SUPPORT LARGE LOAD IN XCEL ENERGY’S SERVICE AREAS
Partnership Announcement: Xcel Energy and NEXTERA Energy have agreed to collaborate on delivering generation solutions.
Focus on Renewable Energy: The partnership aims to enhance the provision of renewable energy across Xcel Energy's service territories.
See More
Three Energy Companies Offering Reliable Dividends
- Stability of Energy Transfer: Energy Transfer (ET), one of the largest midstream companies globally, operates thousands of miles of pipelines, generating 90% of its EBITDA from contracted fees, ensuring a high dividend yield of 7.25%, which highlights its stability and reliability in the energy sector.
- Growth Potential of Renewables: NextEra Energy (NEE), a leading producer of wind and solar energy serving over 12 million customers, has increased its dividend for 30 consecutive years and is expected to achieve an 8% annual earnings growth, showcasing its strong growth potential in the renewable energy space.
- Market Position of ExxonMobil: ExxonMobil (XOM), one of the largest energy companies worldwide, boasts a 42-year record of dividend increases with a current yield of 3%, and its recent acquisition of Pioneer Natural Resources has further solidified its long-term growth potential in the Permian Basin.
- Overall Industry Performance: While the oil and gas industry may seem dull, the stable dividends and strong market positions of Energy Transfer, NextEra Energy, and ExxonMobil make them focal points for investors, providing reliable investment returns.
See More
NextEra Energy: A New Opportunity in AI Investment
- Power Company Meets AI: NextEra Energy has partnered with Alphabet and Meta Platforms to provide power for data centers and accelerate nuclear energy development in the U.S., showcasing its strategic position in the growing demand for AI infrastructure.
- Strong Historical Returns: NextEra's trailing one-year average annual return stands at 27.35%, with three-year returns at 7.45%, five-year at 3.3%, and ten and fifteen-year returns at 14.25% and 14.72% respectively, indicating its long-term investment potential.
- Market Leadership: With a market cap of $182 billion, NextEra is the top player in the utilities sector, and its reasonable forward P/E ratio of 21 and price-to-sales ratio of 6.6 make it attractive for long-term investors.
- Stable Dividend Growth: NextEra offers a dividend yield of 2.6%, with payouts increasing from $1.25 per share in 2019 to $1.87 in 2023, reflecting its ongoing profitability and commitment to shareholder returns.
See More
Utility Stocks Poised for Strong Growth Amid AI Demand
- Utility Index Performance: The Vanguard Utilities Index Fund ETF has risen over 11% in the past 12 months, indicating strong returns for this typically sleepy sector, reflecting sustained growth in power demand.
- NextEra Energy Growth Potential: NextEra Energy's adjusted earnings per share grew over 8% last year, with 8.7 gigawatts of new generation and storage projects, and it expects to grow earnings per share at over 8% annually through 2035, supporting its plans to increase dividends in the coming years.
- Dominion Energy Investment Plans: Dominion Energy is collaborating with data centers and plans to invest $50 billion between 2025 and 2029 to support power demand, particularly in Virginia, where power demand surged 30% last year and is expected to continue growing.
- Dual Return Potential: NextEra and Dominion are expected to be the biggest beneficiaries of the AI power surge, and combined with their dividends, this will drive strong shareholder returns, making them top utility stocks to buy this month.
See More
AI Data Centers Drive Surge in Power Demand
- Surge in Power Demand: Power demand in Virginia surged by 30% due to the rise of AI data centers, prompting Dominion Energy to plan a $50 billion investment from 2025 to 2029 to support its utility operations and maintain its leadership in this rapidly growing market.
- Renewable Energy Leader: NextEra Energy achieved over 8% growth in adjusted earnings per share in 2025 and brought 8.7 gigawatts of new generation and storage projects online last year, showcasing its strong growth potential in renewable energy, with expectations of over 8% annual earnings growth through 2035.
- Major Investment Projects: Dominion's Coastal Virginia Offshore Wind project is expected to deliver nearly 3 gigawatts of power, with 50% funding from partner Stonepeak, and is on track for full completion in 2027, further driving its earnings growth.
- Shareholder Return Potential: With dividend yields of 2.5% for NextEra Energy and over 4% for Dominion Energy, combined with robust earnings growth, both companies are expected to deliver double-digit annual returns, making them top utility stocks to buy this month.
See More
NextEra Energy and Xcel Energy Sign MOU to Enhance Resource Delivery
- MOU Signing: NextEra Energy signed a memorandum of understanding with Xcel Energy to accelerate the delivery of generation resources for large load customers, including data centers, resulting in a 1.4% stock price increase on Wednesday, reaching its highest level in over three years.
- Resource Delivery Enhancement: The companies expect improved collaboration on generation, storage, and transmission investments will enable them to better anticipate system needs and quickly assess where large customer demand intersects with available grid and power assets, enhancing market responsiveness.
- Data Center Demand Growth: Xcel Energy stated that the agreement will allow it to increase the data center demand it can serve through the 2030s, reflecting a positive outlook on future market potential and further solidifying its position in the energy market.
- Formal Agreement Upcoming: Key commercial terms have been agreed upon in the MOU, with a formal joint development agreement expected to be executed in the coming months, marking a significant step in the deepening collaboration between the two companies in the energy sector.
See More
XCEL ENERGY AND NEXTERA ENERGY PARTNER TO PROVIDE GENERATION SOLUTIONS AND SUPPORT LARGE LOAD IN XCEL ENERGY’S SERVICE AREAS
Partnership Announcement: Xcel Energy and NEXTERA Energy have agreed to collaborate on delivering generation solutions.
Focus on Renewable Energy: The partnership aims to enhance the provision of renewable energy across Xcel Energy's service territories.
See More
Three Energy Companies Offering Reliable Dividends
- Stability of Energy Transfer: Energy Transfer (ET), one of the largest midstream companies globally, operates thousands of miles of pipelines, generating 90% of its EBITDA from contracted fees, ensuring a high dividend yield of 7.25%, which highlights its stability and reliability in the energy sector.
- Growth Potential of Renewables: NextEra Energy (NEE), a leading producer of wind and solar energy serving over 12 million customers, has increased its dividend for 30 consecutive years and is expected to achieve an 8% annual earnings growth, showcasing its strong growth potential in the renewable energy space.
- Market Position of ExxonMobil: ExxonMobil (XOM), one of the largest energy companies worldwide, boasts a 42-year record of dividend increases with a current yield of 3%, and its recent acquisition of Pioneer Natural Resources has further solidified its long-term growth potential in the Permian Basin.
- Overall Industry Performance: While the oil and gas industry may seem dull, the stable dividends and strong market positions of Energy Transfer, NextEra Energy, and ExxonMobil make them focal points for investors, providing reliable investment returns.
See More
NextEra Energy: A New Opportunity in AI Investment
- Power Company Meets AI: NextEra Energy has partnered with Alphabet and Meta Platforms to provide power for data centers and accelerate nuclear energy development in the U.S., showcasing its strategic position in the growing demand for AI infrastructure.
- Strong Historical Returns: NextEra's trailing one-year average annual return stands at 27.35%, with three-year returns at 7.45%, five-year at 3.3%, and ten and fifteen-year returns at 14.25% and 14.72% respectively, indicating its long-term investment potential.
- Market Leadership: With a market cap of $182 billion, NextEra is the top player in the utilities sector, and its reasonable forward P/E ratio of 21 and price-to-sales ratio of 6.6 make it attractive for long-term investors.
- Stable Dividend Growth: NextEra offers a dividend yield of 2.6%, with payouts increasing from $1.25 per share in 2019 to $1.87 in 2023, reflecting its ongoing profitability and commitment to shareholder returns.
See More
