Citi Upgrades Three Energy Storage Stocks on Data Center Demand, US Manufacturing Outlook

Citi analysts upgraded ratings for three clean energy and storage companies, highlighting improved growth prospects tied to U.S. manufacturing, rising energy storage demand, and significant opportunities from the buildout of hyperscale data centers.

The Upgrades in Detail

In a research note, the bank outlined its revised ratings and price targets, balancing potential tailwinds with specific company and policy-related risks.

• Canadian Solar (CSIQ): Upgraded to Neutral from Sell, with a price target raised to $18 from $11. Analysts pointed to the company's strategic shift toward higher-margin U.S. solar module manufacturing and an expanding energy storage business. They expect storage volumes to nearly double year-over-year and noted the potential for Canadian Solar to secure its first hyperscale customer soon. However, Citi remains cautious due to uncertainties around foreign entity of concern (FEOC) rules and a pending trade case.
• Fluence Energy (FLNC): Upgraded to Buy from Neutral, though the price target was trimmed to $24 from $26. Citi sees an attractive risk-reward profile for the battery storage provider, believing it is well-positioned to capture demand from data center operators. Key risks include a fiscal 2026 revenue forecast heavily weighted to the fourth quarter and the need for significant new orders to meet 2027 expectations.
• Energy Vault (NRGV): Upgraded to Buy from Neutral, with its price target lowered slightly to $5 from $5.25 to account for a higher share count. The upgrade is based on improving fundamentals, a growing backlog, and the appointment of a new CFO with a background in energy and infrastructure finance. Analysts also noted the stock's 30% decline quarter-to-date has created a more attractive entry point for investors.

Ad

Market Context and Outlook

The upgrades reflect a broader theme of increasing electricity demand driven by the power-intensive needs of artificial intelligence and data centers. This trend is expected to be a major catalyst for the energy storage sector, which helps stabilize power grids and ensure reliable supply.

While optimistic about these growth drivers, the Citi note also emphasized that the sector faces ongoing challenges. Investors should remain aware of potential headwinds from policy shifts, international trade disputes, and company-specific execution risks as these firms work to scale their operations and secure large contracts.