Overview

Goldman Sachs has highlighted seven regulated utilities and independent power producers that it believes are well‑positioned to capture the surge in data‑center power demand. The firm raised its global data‑center capacity forecast to 217 GW by 2030, up from 168 GW in its February 2026 update, implying an additional 116 GW beyond the 101 GW expected for 2025.

Data‑Center Capacity and Capital Expenditure Outlook

The projected capacity addition translates to roughly $6 trillion in capital expenditures, based on an assumed cost of $50 billion per gigawatt. Goldman Sachs expects this spending to be largely funded by hyperscale operators, whose capital outlays are anticipated to average $1 trillion annually. For the United States alone, the firm forecasts 125 GW of data‑center supply by 2030, with demand estimated at 108 GW on an annual average basis, supporting an expected 3.5 % compound annual growth rate in power demand through 2030.

Utility Recommendations and Price Targets

Goldman Sachs assigned a Buy rating to each of the seven utilities, accompanied by 12‑month price targets:

  • FirstEnergy (FE) – $54 target, based on an 18× PE multiple; exposure to the PJM region; risks include Ohio rate‑case outcomes, pension or interest‑expense surprises, and mild weather.
  • Xcel Energy (XEL) – $93 target, using a 20× PE multiple; attractive leverage to renewables and transmission in the MISO region; risks include adverse rate‑case results, litigation, ROE gaps, and cost‑management issues.
  • Duke Energy (DUK) – $145 target, 19.5× PE multiple; 19 % total‑return potential; risks involve balance‑sheet concerns, regulatory uncertainty from recent rate filings, and possible load‑growth revisions. Duke also raised its quarterly dividend to $1.085 per share and settled its North Carolina rate case.
  • Sempra (SRE) – $109 target, derived from a sum‑of‑the‑parts valuation; benefits from ERCOT exposure; risks include execution and communication challenges, weakening balance sheet, and regulatory outcomes. New Texas transmission projects are expected to require over $7 billion in investment, and its ECA LNG Phase 1 project in Mexico shipped its first cargo.
  • Talen Energy (TLN) – $499 target, based on a 10× EV/EBITDA multiple and a 7 % free‑cash‑flow yield; exposure to PJM; risks cover regulatory and interconnection hurdles, lower power prices, and a slowdown in data‑center demand. Talen reported Q1 2026 EPS of $1.33 on revenue of $1.13 billion and completed debt refinancing that should save roughly $47 million annually.
  • Vistra (VST) – $209 target, using a 10.5× EV/EBITDA multiple and a 7 % free‑cash‑flow yield; ERCOT presence; risks involve PJM capacity‑auction uncertainty, lower power prices, and future demand growth. Vistra posted Q1 2026 EPS of $1.31 with revenue of $5.64 billion; Bernstein initiated coverage with an Outperform rating, while Jefferies and Raymond James trimmed their targets.
  • NRG Energy (NRG) – $197 target, based on a 9× EV/EBITDA multiple and an 8 % free‑cash‑flow yield; ERCOT exposure; risks include heightened headline risk from AI and data‑center exposure, lower power prices, and PJM auction price uncertainty. NRG reported Q1 2026 EPS of $1.49 and appointed former Shell executive Glenn Wright to its board of directors.

Company‑Specific Highlights and Risks

  • FirstEnergy filed a three‑year rate plan with Ohio regulators, proposing roughly $800 million per year for infrastructure upgrades, and announced several senior‑leadership appointments, including a new Vice President of Business Transformation.
  • Xcel Energy saw a subsidiary file a stipulation in its New Mexico electric rate case seeking a $90 million base‑rate revenue increase; Barclays and Jefferies raised their price targets, while Mizuho lowered its target.
  • Duke Energy received an upgrade to Overweight from KeyBanc after its dividend increase and North Carolina settlement; BMO Capital reduced its price target.
  • Sempra highlighted its first LNG cargo shipment from the ECA LNG Phase 1 project in Mexico.
  • Vistra attracted new coverage from Bernstein, which assigned an Outperform rating.
  • NRG Energy added former Shell executive Glenn Wright to its board, underscoring governance changes.

Risks Across the Utilities

Goldman Sachs identified common downside factors: adverse regulatory rate‑case outcomes, higher‑than‑expected pension or interest expenses, weather‑related earnings impacts, litigation exposure, balance‑sheet weaknesses, and a potential slowdown in data‑center power demand.