2 Energy Stocks With Strong AI Tailwinds

"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 a competitive advantage"

"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."

AI-driven data centers have sharply increased electricity demand, elevating energy stocks and heavy-equipment suppliers such as turbine manufacturers. Utilities and power producers can profit from projected AI electricity growth, potentially rising up to 300% over the next decade, without directly overinvesting in AI technology. NextEra Energy provides low-cost exposure to rising AI-related power demand, trading at about 26.7 times trailing P/E, with a recent $800 Symmetry Energy deal and plans to reopen the Duane Arnold nuclear plant by 2029. NextEra offers a roughly 2.7% dividend yield that appears well-covered and likely to grow.

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