Utility stocks could see substantial returns as the demand for electricity rises.
AI presents itself as a powerful technology, but having access to electricity is crucial for its future implementation. AI data centers consume a lot more power than traditional workloads, relying on specialized chips and sophisticated cooling systems to function optimally around the clock.
Consequently, public utilities might become significant players in the AI landscape. They are positioned to invest in expanding their power generation capabilities and related infrastructure, which could lead to faster growth in earnings and dividends, ultimately providing strong returns for investors.
Let’s explore some utilities that are well-situated to benefit from the AI surge.
NextEra Energy
NextEra Energy operates Florida Power & Light (FPL), the largest power company in the U.S., serving about 12 million residents in Florida. Additionally, it owns one of the biggest energy infrastructure businesses in the country, NextEra Energy Resources.
Florida stands in a good position to take advantage of the AI data center demand. Notably, data centers exceeding 100 megawatts are exempt from state sales tax, and FPL was the first to gain approval for major state charges. These developments should enable utilities to meet the growing electricity needs from data centers in Florida.
Today’s changes
(+0.81%) $0.65
current price
$80.93
Key data points
Market capitalization
$169 billion
daily range
$79.58 – $81.02
52 week range
$61.72 – $87.53
volume
8.9 million
average volume
9.7 million
gross profit
36.09%
dividend yield
2.80%
NextEra Energy Resources is capitalizing on the AI power growth as well. This branch develops and operates diverse clean energy infrastructure, including natural gas pipelines, transmission lines, and various renewable energy sources. In particular, the company has a strategic partnership with Google to advance nuclear energy projects and data center operations. These efforts support NextEra’s aim for adjusted earnings growth of more than 8% annually over the next decade while maintaining a 2.8% dividend yield.
Dominion Energy
Dominion Energy provides electricity to 3.6 million customers across Virginia, North Carolina, and South Carolina. Its Virginia operations are likely to reap the benefits of the AI boom, given that Virginia is one of the largest data center markets in the world, with utilities requesting a significant increase in power for these centers.
Today’s changes
(+1.11%) $0.65
current price
$59.24
Key data points
Market capitalization
$51 billion
daily range
$58.27 – $59.38
52 week range
$48.07 – $62.87
volume
5.7M
average volume
5.8M
gross profit
56.59%
dividend yield
4.51%
The company is heavily investing to enhance its generation capability to meet the upcoming spikes in energy demand. A $50 billion capital investment plan has been set for the period from 2025 to 2029, with Dominion Energy Virginia overseeing a significant portion of the funding. This investment includes half of the construction costs for a major offshore wind project projected to be completed in 2026.
Moreover, Dominion is projecting a steady earnings per share growth of 5% to 7% in the long term, planning to maintain its dividend rate at a 4.5% yield. This approach could lead to gradual increases as profits rise, although a more cautious dividend growth strategy might be on the table as well.
Entergy
Entergy supplies electricity to 3 million customers across multiple states, including Arkansas, Louisiana, Mississippi, and Texas. The company forecasts a surge in power demand, especially from industrial clients like data centers.
Today’s changes
(+1.55%) $1.43
current price
$93.86
Key data points
Market capitalization
$42 billion
daily range
$91.89 – $94.29
52 week range
$75.01 – $98.58
volume
1.9 million
average volume
2.7M
gross profit
28.83%
dividend yield
2.60%
For instance, Meta Platforms is constructing a $10 billion AI data center in Louisiana, with Entergy supplying the power. The utility is also working on two new gas plants with a capacity of 1.5 GW to support this effort, ensuring a reliable gas supply from pipeline company Energy Transfer.
Between 2026 and 2029, Entergy plans to invest $41 billion in new generation capacity and related infrastructure, alongside power agreements with third-party providers to secure additional power resources. NextEra Energy is set to provide up to 6.2 GW of renewable energy for Entergy, which is expected to facilitate an average annual earnings growth of more than 8%. This should enable Entergy to keep increasing its 2.8% dividend yield.
Strong Total Return Potential
As utilities commit considerable investments to accommodate the rising power demand from AI data centers, they anticipate rapid revenue growth in the coming years. Coupled with dividend income, these stocks offer the potential for significant returns for investors, positioning them as potential frontrunners in the AI boom.
