Is PG&E an AI Power Play? Why Options Traders Are Betting Big

Core Viewpoint - Pacific Gas & Electric (PG&E) is experiencing a significant shift in investor sentiment, driven by a combination of operational stability and new growth opportunities linked to the artificial intelligence (AI) boom [2][12]. Group 1: Investor Sentiment and Trading Activity - A notable increase in bullish call options trading for PG&E stock was observed, with a surge of over 380% in volume compared to its daily average, indicating heightened investor confidence [2][12]. - Investors are targeting options expiring in September 2025 with strike prices of $16, $19, and $20, suggesting expectations of a sustained stock rally with potential upside of 20% to 50% [3][12]. Group 2: Financial Performance and Stability - PG&E reaffirmed its full-year non-GAAP core earnings per share (EPS) guidance of $1.48 to $1.52, reflecting management's confidence in operational stability [4][12]. - The company is proactively managing its regulatory environment, recently submitting its smallest rate increase request in a decade, which supports its $63 billion, five-year financial plan [5][12]. Group 3: Growth Catalysts - The demand for PG&E's new data center pipeline has surged to 10 gigawatts, driven by the AI revolution in Northern California, presenting a unique growth opportunity [6][7]. - Capital investments required to meet this new demand will be added to PG&E's rate base, supporting the company's goal of at least 9% annual EPS growth through 2028 [8][12]. Group 4: Customer and Regulatory Impact - Each gigawatt of new data center load can reduce residential bills by 1-2%, as fixed costs are spread over increased sales, benefiting both customers and regulators [9][12]. - PG&E's partnerships with major tech companies, such as Microsoft, enhance its position as a key player in the AI economy [9][12]. Group 5: Operational Improvements - In Q2, PG&E placed 32 miles of powerlines underground and strengthened 103 miles of grid infrastructure in high-risk fire zones, demonstrating commitment to safety and operational improvements [11][12]. - The parent company, PG&E Corp., holds a positive credit outlook from S&P Global Ratings, positioning it for an investment-grade rating that could lower borrowing costs [11][12].