Is Central Puerto (CEPU) the Best High Growth Utility Stock To Invest In?

In This Article:

We recently compiled a list of 10 High Growth Utility Stocks To Invest In. In this article, we will look at where Central Puerto (NYSE:CEPU) ranks among the high growth utility stocks to invest in.

According to a report by Goldman Sachs Research, the US electricity demand is set to surge in the coming years, driven in part by the growing need for power to support the increasing use of artificial intelligence (AI) and data centers. After a decade of roughly zero growth in power demand, the US is expected to experience a significant increase in electricity consumption, with demand rising by around 2.4% between 2022 and 2030.

The report estimates that around 0.9% of this growth will be driven by the increasing power needs of data centers, which are expected to use 8% of US power by 2030, up from 3% in 2022. This surge in demand will require significant investment in new generation capacity, with US utilities needing to spend around $50 billion to support data centers alone.

Furthermore, the report notes that the incremental power consumption of data centers will also drive an increase in natural gas demand, with an estimated 3.3 billion cubic feet per day of new demand expected by 2030. This will require new pipeline capacity to be built to meet the growing needs of the data center industry.

In contrast, the report highlights that Europe’s power demand has been declining over the past 15 years, largely due to a series of economic shocks, including the global financial crisis, the COVID-19 pandemic, and the energy crisis triggered by the war in Ukraine. Despite this, the report notes that Europe will still need to invest over $1 trillion to prepare its power grid for the increasing demands of AI and electrification.

Investors Are Plugging into the Utility Sector Amid the AI Boom

In an interview on Yahoo Finance, Pavel Molchanov, Managing Director at Raymond James, discussed the growing connection between the utility sector and the emerging trend of Artificial Intelligence (AI). Molchanov shed light on why utilities have become an unexpected beneficiary of the AI boom.

According to Molchanov, as the world becomes increasingly reliant on data centers to power AI technologies, the demand for electricity is expected to surge. This has led investors to take notice of the utility sector, which is poised to benefit from the growing need for power. Molchanov noted that while utilities are a regulated industry with fixed prices, the overall electricity demand is ultimately driven by the economy. Therefore, if data centers can create growth in overall US power demand for the first time in 20 years, it would be a positive development for utility companies.

Waiting for permission
Allow microphone access to enable voice search

Try again.