Goldman Sachs Identifies 7 Utility Stocks to Capitalize on Data Center Power Demand

Goldman Sachs has identified seven regulated utilities and independent power producers that it believes are well-positioned to benefit from the explosive growth in power demand from data centers. The investment bank significantly raised its forecast for global data center capacity, citing the ongoing build-out required for artificial intelligence and cloud computing.

Data Center Boom Drives Power Forecast

In a research note, Goldman Sachs increased its global data center capacity forecast to 217 gigawatts (GW) by 2030, a substantial jump from its February 2026 estimate of 168GW. This represents an addition of 116GW of capacity from the 101GW expected in 2025.

The firm estimates this expansion will require approximately $6 trillion in capital expenditures, assuming a cost of $50 billion per gigawatt. This spending is expected to be funded by hyperscale companies' capital expenditure, which Goldman Sachs projects will average around $1 trillion annually. For the United States, the bank forecasts a 3.5% compound annual growth rate (CAGR) for power demand through 2030, driven by data center needs.

Goldman's Top Utility and Power Picks

Analysts at the firm issued Buy ratings for seven companies with strategic exposure to key energy markets seeing data center development, such as the PJM, ERCOT, and MISO regions.

Ad

• FirstEnergy (FE): Price target of $54. Highlighted for its exposure to the PJM Interconnection region.
• Xcel Energy (XEL): Price target of $93. Noted for its leverage to renewables and transmission infrastructure in the MISO region.
• Duke Energy (DUK): Price target of $145. Cited for its improving regulatory position and opportunities in the Southeast.
• Sempra (SRE): Price target of $109. Benefits from its operational footprint in the high-demand ERCOT market in Texas.
• Talen Energy (TLN): Price target of $499. Positioned to capitalize on demand within the PJM region.
• Vistra (VST): Price target of $209. Operates in the ERCOT region, a major hub for data center growth.
• NRG Energy (NRG): Price target of $197. Also has significant exposure to the Texas-based ERCOT market.

Market Implications and Risks

This analysis underscores a significant growth catalyst for the traditionally defensive utilities sector. The immense power requirements of AI and data centers are creating a durable, long-term demand trend that can drive earnings growth for power generators and transmission providers in key geographical hubs.

However, Goldman Sachs also noted potential risks for investors. These include unfavorable outcomes in regulatory rate cases, uncertainty in capacity auctions, volatility in power prices, and any potential slowdown in the pace of data center construction. Successful execution and cost management will be critical for these companies to fully capitalize on the opportunity.