Power stocks are partying like it’s 2024. While the S&P 500 drags its feet, Vistra and Constellation Energy are tearing up the leaderboard.
Vistra’s up 22.7%, Constellation 34.5% — and we’re only two weeks into the year. Nvidia, meanwhile? The AI darling is barely up 2%.
If you are a regular MONIIFY reader, this shouldn’t come as a surprise. We called it.
It’s electric
This buzz around energy stocks is all about AI’s insatiable appetite for power.
Global demand for data centers, the energy-guzzling backbone of AI, stands at an estimated 55GW right now, with 14% of that attributed to AI, according to Goldman Sachs.
The bank says that’ll jump to 84GW by 2027, with AI taking an even bigger slice of close to 27%. And energy utilities will be fueling this run.
Read more: #SnapShot: Oklo is riding the AI wave. Wait, who?
Despite their monster moves, these power players still look cheap next to tech.
Vistra trades at a forward price-to-earnings ratio of 22.9x, and while Constellation Energy is pricier at 32.7x, it’s still outperforming the broader market by a mile.
And for bargain hunters, Goldman likes NextEra and Sempra, with P/E ratios of 18.8x and 16x, respectively.
Tread with caution
But before you go all in, here’s the “hold up” moment.
Power stocks had a massive rally in 2024 too, thanks to AI’s meteoric rise. And a lot of good news is already baked into their prices.
Plus, if Big Tech decides to pump the brakes on AI spending — or if the economy hits a rough patch — these stocks might cool off.
Read more: Nuclear energy is having a (booming) moment
Remember: before ChatGPT lit the world on fire in 2022, power stocks used to be the quiet kid. Then AI blew up, and now they are the center of attention at the party.
But with profit growth set to ease after 2025 for Vistra and Constellation, according to LSEG data, it might be wise to keep an eye on the long game.
Edited by Ankush Chibber. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
