Core Insights - Utilities are becoming essential infrastructure for the AI economy, driven by increasing power demand from data centers and AI technologies [4][9] - The utility sector has shown strong performance, particularly in the Southeast and Eastern United States, where many data centers are located [2][3] - The monopoly status of utilities provides them with a unique competitive advantage compared to AI developers, who face significant competition [6][7] Company Highlights - Southern Company (NYSE: SO) is recognized for its regulated operations and predictable cash flows [1] - Entergy (NYSE: ETR) is noted for its significant presence in Louisiana and the Gulf region, where new data center construction is ongoing [1] - Duke Energy (NYSE: DUK) is favored for its exposure to fast-growing population centers and enterprise demand [2] - Dominion Energy (NYSE: D) is highlighted as a high-quality dividend payer with a yield exceeding 4% [1][3] Market Dynamics - Utilities have experienced a pullback of approximately 10% recently, creating potential buying opportunities as many stocks approach oversold levels [3][12] - The demand for electricity is expected to remain strong due to factors such as population growth and extreme weather, regardless of the pace of AI adoption [7][17] - Investors are advised to adopt a gradual approach to buying utility stocks, starting with partial positions and adding on weakness [8][19]

Core Viewpoint - Dominion Energy, Inc. is facing price target reductions from analysts, reflecting a cautious outlook on the utility sector's growth potential, particularly influenced by data center demand [3][4]. Group 1: Analyst Ratings and Price Targets - Morgan Stanley analyst David Arco lowered the price target for Dominion Energy from $65 to $62 while maintaining an 'Equal Weight' rating, indicating a potential upside of 4.5% [3]. - JPMorgan also reduced its price target from $62 to $59 and kept an 'Underweight' rating, aligning with broader updates in the North American utilities sector [4]. Group 2: Company Position and Market Dynamics - Dominion Energy provides regulated electricity to 3.6 million customers and natural gas service to 500,000 customers in South Carolina [2]. - The company has established a significant presence in Virginia's 'Data Center Alley,' connecting 450 data centers, with over 25% of its sales attributed to these facilities [5]. - As of September 2025, Dominion Energy has approximately 47 GW of data-center supply in various contracting stages, an increase from around 40 GW as of December 2024 [5].

Core Insights - Eversource Energy (NYSE:ES) is recognized as one of the best utility stocks to invest in according to hedge funds [1] - The company operates New England's largest energy delivery system, serving customers in Connecticut, Massachusetts, and New Hampshire [2] Price Target Adjustments - JPMorgan has lowered its price target on Eversource Energy from $72 to $71 while maintaining an 'Underweight' rating, indicating an upside potential of almost 4% from the current share price [3] - Conversely, BofA raised its price target from $72 to $75 while keeping a 'Buy' rating, following an investor trip and discussions with the company's CFO, leading to increased EPS forecasts for the 2026-29 period [4] Financial Outlook - Eversource Energy reaffirmed its 5-year capital plan of $24.2 billion through 2029, with additional capital investment opportunities estimated between $1.5 billion to $2 billion [5] - The company declared a quarterly dividend of $0.7525 per share, resulting in an annual dividend yield of 4.43%, positioning it among the best utility dividend stocks [5]

Core Viewpoint - CMS Energy Corporation (NYSE:CMS) has experienced recent adjustments in its stock price targets by analysts, reflecting a cautious outlook on the utilities sector driven by data centers and growth potential in the upcoming year [2][3]. Group 1: Analyst Price Target Adjustments - Morgan Stanley lowered its price target for CMS Energy from $76 to $71 while maintaining an 'Equal Weight' rating [2]. - JPMorgan reduced its price target from $85 to $80 but kept an 'Overweight' rating, indicating an upside potential of over 14% from the current share price [3]. Group 2: Financial Performance and Guidance - CMS Energy reported better-than-expected results in its third-quarter earnings [4]. - The company slightly raised its 2025 adjusted earnings guidance to a range of $3.56-$3.60 per share, up from the previous range of $3.54-$3.60 [4]. - CMS Energy introduced its 2026 adjusted earnings guidance of $3.80-$3.87 per share and reaffirmed its long-term adjusted EPS growth target of 6%-8% [4].

Core Insights - Entergy Corporation (NYSE:ETR) is recognized as one of the best utility stocks to invest in according to hedge funds [1] - Morgan Stanley has reduced its price target for Entergy from $91 to $86 while maintaining an 'Equal Weight' rating, indicating a cautious outlook on the stock [3] Group 1: Company Overview - Entergy Corporation is an integrated energy company serving approximately 3 million utility customers across Arkansas, Louisiana, Mississippi, and Texas [2] Group 2: Recent Developments - Entergy has initiated the construction of two new combined-cycle combustion turbine generation facilities, approved by the Louisiana Public Service Commission, with a total capacity of 1.5 GW [4] - These new power plants are expected to support Meta's planned data center in Louisiana and are projected to save customers around $650 million, contributing to lower utility bills in the region [4] Group 3: Market Position and Future Outlook - Entergy has been included in a list of energy stocks suitable for retirement portfolios, although some analysts suggest that certain AI stocks may offer better upside potential with less risk [5]

Core Insights - NextEra Energy, Inc. (NYSE:NEE) is recognized as one of the best utility stocks to invest in according to hedge funds, with a market capitalization exceeding $168 billion, making it the most valuable utility company globally [2] Financial Performance and Guidance - The company has raised its 2025 adjusted earnings guidance to a range of $3.62-$3.70 per share, up from a previous range of $3.45-$3.70, and updated its 2026 adjusted EPS guidance to $3.92-$4.02 from $3.63-$4.00, targeting long-term adjusted EPS growth of at least 8% through 2035 [4] - NextEra Energy's CEO announced plans to build 15 GW of new power generation for data center hubs by 2035, driven by increasing power demand from data centers [4] Dividend Policy - The company has a strong history of dividend growth and reaffirmed its target to increase dividends per share by approximately 10% annually through 2026, starting from a 2024 base, followed by an expected growth of around 6% annually in 2027 and 2028 [5] Analyst Ratings - UBS analyst William Appicelli reduced the price target for NextEra Energy from $94 to $91 while maintaining a 'Buy' rating, while Morgan Stanley lowered its target from $97 to $95 but kept an Overweight rating [3]

Core Viewpoint - PG&E Corporation (NYSE:PCG) is experiencing adjustments in price targets from analysts, reflecting a cautious outlook amidst broader market trends, particularly in the utility sector driven by data center demand growth [2][3]. Price Target Adjustments - Morgan Stanley reduced its price target for PG&E from $21 to $20 while maintaining an 'Equal Weight' rating, emphasizing the influence of data centers on utility performance and cautioning against companies under affordability scrutiny due to the upcoming election year [2]. - JPMorgan also lowered its price target from $22 to $21, indicating a potential upside of nearly 33% from the current share price, while keeping an 'Overweight' rating on the stock [3]. Dividend Announcement - PG&E Corporation announced a doubling of its quarterly dividend to $0.05 per share, payable on January 15, 2026, to shareholders on record as of December 31, resulting in an annual dividend yield of 1.26% [3]. Market Context - The performance of utility companies, including PG&E, is expected to be significantly influenced by the demand from data centers, particularly as major tech firms invest heavily in AI [2].

Core Insights - Constellation Energy Corporation (NASDAQ:CEG) is recognized as one of the best utility stocks to invest in according to hedge funds [1] - The company is the largest producer of carbon-free energy in the US, with a generating capacity exceeding 32.4 GW from various energy sources [2] Price Target Adjustments - UBS raised its price target for Constellation Energy from $385 to $420, indicating an upside potential of over 16% from the current share price while maintaining a 'Buy' rating [3] - Conversely, JPMorgan lowered its price target from $422 to $410 but kept an 'Overweight' rating, reflecting adjustments made after the third-quarter report [4] Acquisition and Financial Impact - Constellation Energy announced an agreement with the U.S. Department of Justice to proceed with its $16.4 billion acquisition of Calpine Corporation, which is expected to enhance the company's free cash flow by $2 billion annually [5] - The acquisition will significantly expand Constellation's nuclear energy portfolio, which is increasingly relevant as major tech companies seek nuclear energy solutions for their data centers [6]

Core Insights - The utility sector has benefited significantly from the AI boom, with major companies securing substantial contracts with hyperscalers, leading to billions in investments in the coming years [1] - Recent concerns about an AI bubble have tempered bullish sentiment, causing investors to question the realization of these promised investments [2] - Despite outperforming the market for most of the year, the utilities sector has recently experienced a pullback, with the S&P Utilities index up 12.41% since the beginning of 2025, compared to a 15.44% gain in the overall S&P 500 [3] Company Highlights - **Dominion Energy, Inc. (NYSE:D)**: - Serves 3.6 million homes and businesses in Virginia, North Carolina, and South Carolina, and provides natural gas service to 500,000 customers in South Carolina [8] - Morgan Stanley reduced its price target from $65 to $62, maintaining an 'Equal Weight' rating, indicating a potential upside of 4.5% [9] - JPMorgan also lowered its price target from $62 to $59, keeping an 'Underweight' rating [10] - Holds a strong position in Virginia's 'Data Center Alley', with 450 data centers connected and over 25% of sales from these facilities; has approximately 47 GW of data-center supply in contracting stages, up from 40 GW [11] - **Eversource Energy (NYSE:ES)**: - Operates New England's largest energy delivery system, serving customers in Connecticut, Massachusetts, and New Hampshire [12] - JPMorgan lowered its price target from $72 to $71, maintaining an 'Underweight' rating, indicating almost 4% upside potential [13] - BofA raised its price target from $72 to $75, maintaining a 'Buy' rating after discussions regarding the utility's regulatory roadmap [14] - Reaffirmed a 5-year capital plan of $24.2 billion through 2029, with additional investment opportunities of $1.5 billion to $2 billion; declared a quarterly dividend of $0.7525 per share, with an annual dividend yield of 4.43% [15]

Group 1 - The tech market is experiencing a mix of excitement and anxiety as AI stock valuations reach historic highs, raising concerns about whether the market has become overvalued heading into 2026 [2] - Recent news, such as Oracle losing a key funding partner, has caused some market unease, but the overall market reaction has been limited, indicating that a collapse is not imminent [3] - Marc Lichtenfeld emphasizes that bubbles typically do not burst when there is widespread discussion about the possibility of a bubble, suggesting that current market sentiment does not reflect a bubble mentality [3] Group 2 - Lichtenfeld recommends focusing on companies with strong cash flow and rising dividends as a strategy to navigate the current market conditions, providing options for both bullish and defensive investors [4] - Black Hills Corp. is highlighted as a utility stock that stands to benefit from the growing demand for energy in AI infrastructure hubs, particularly in regions like Wyoming where data centers are emerging [5] - Valuations in the AI sector remain high, but historical patterns indicate that a bubble is unlikely to burst while caution prevails, with Black Hills Corp. positioned to capitalize on AI-related energy demands [6]