Overview

Goldman Sachs has identified seven regulated utilities and independent power producers that stand to benefit from a rapid increase in data‑center power demand. The bank lifted its global data‑center capacity outlook to 217 GW by 2030, up from 168 GW in its February 2026 update, indicating an additional 116 GW beyond the 2025 estimate of 101 GW. To deliver this capacity, Goldman estimates roughly $6 trillion in capital expenditures, assuming $50 billion per gigawatt. It expects $1 trillion of annual hyperscale‑related spending to fund the build‑out.

In the United States, the firm projects 125 GW of data‑center supply by 2030 against an estimated 108 GW of demand on an annual average basis, implying a 3.5% compound annual growth rate in power demand through 2030.

Utility Recommendations

Goldman assigned Buy ratings to all seven utilities, with price targets and valuation multiples as follows:

  • FirstEnergy (FE) – $54 target, 18× PE. Exposure to the PJM region; Ohio subsidiaries filed a three‑year rate plan calling for roughly $800 million per year in infrastructure upgrades. The company also announced a new Vice President of Business Transformation. Risks: Ohio rate‑case outcome, pension/interest expense spikes, mild weather.
  • Xcel Energy (XEL) – $93 target, 20× PE. Attractive leverage to renewables and transmission in the MISO region. A subsidiary in New Mexico filed a stipulation proposing a $90 million base‑rate revenue increase. Barclays and Jefferies raised their targets, while Mizuho lowered its target. Risks: adverse rate‑case outcomes, litigation, ROE gap, cost management.
  • Duke Energy (DUK) – $145 target, 19.5× PE, 19% total‑return potential. The firm cites upside from generation capex and a stronger regulatory stance in the Southeast. Duke raised its quarterly dividend to $1.085 per share and settled its North Carolina rate case. KeyBanc upgraded Duke to Overweight; BMO Capital cut its target. Risks: balance‑sheet concerns, regulatory uncertainty, load‑growth revisions.
  • Sempra (SRE) – $109 target, sum‑of‑the‑parts valuation. Benefits from ERCOT exposure. Announces new Texas transmission projects requiring over $7 billion in investment and the ECA LNG Phase 1 project in Mexico shipping its first cargo. Risks: execution, balance‑sheet strength, regulatory outcomes.
  • Talen Energy (TLN) – $499 target, 10× EV/EBITDA, 7% free‑cash‑flow yield. PJM exposure. Reported Q1 2026 EPS of $1.33 on $1.13 billion revenue and completed debt refinancing expected to save about $47 million annually. Risks: regulatory/interconnection issues, lower power prices, slower data‑center demand.
  • Vistra (VST) – $209 target, 10.5× EV/EBITDA, 7% free‑cash‑flow yield. ERCOT exposure. Q1 2026 EPS of $1.31 on $5.64 billion revenue. Bernstein initiated coverage with an Outperform rating; Jefferies and Raymond James trimmed targets. Risks: PJM capacity‑auction uncertainty, power‑price pressure, demand‑growth outlook.
  • NRG Energy (NRG) – $197 target, 9× EV/EBITDA, 8% free‑cash‑flow yield. ERCOT exposure. Reported Q1 2026 EPS of $1.49. Appointed Glenn Wright, former Shell executive, to its board. Risks: AI‑related headline risk, lower power prices, PJM capacity‑auction price uncertainty.

Market Implications

The analysis underscores a sector‑wide shift toward supporting data‑center growth, with utilities positioned in key grid regions (PJM, MISO, ERCOT, Southeast) receiving elevated price targets and valuation multiples. The projected $6 trillion capex requirement highlights the scale of infrastructure investment needed, while the $1 trillion annual hyperscale spend signals sustained funding flow.

Risks & Considerations

Goldman flags regulatory outcomes (rate cases in Ohio, New Mexico, North Carolina, and PJM auctions) and macro‑weather influences as primary downside factors across the utilities. Company‑specific execution risks, balance‑sheet strength, and potential slowdown in data‑center demand also feature prominently.