Zinger Key Points
- JPMorgan picks Entergy, NiSource, and Vistra as top utility plays amid booming AI-driven data center demand.
- Entergy lands another potential $12 billion data center deal, while Vistra and NiSource benefit from rising power needs.
Who knew stodgy utilities would turn into tech's unsung heroes?
JPMorgan analysts Jeremy Tonet and Richard W. Sunderland chose Entergy Corp ETR, NiSource Inc NI, and Vistra Corp VST as top stock picks, betting on a power-hungry AI revolution and surging data center demand to fuel their growth.
Entergy: Oops, It Did It Again?
Entergy is making waves with yet another massive data center deal in Louisiana. A local filing hints at a $12 billion Hut 8 project, which, if confirmed, would be the utility's third major hyperscaler win.
JPMorgan sees this as validation of Entergy's growing dominance in the large commercial & industrial (C&I) power space—big tech is setting up shop, and Entergy is cashing in.
With Meta Platform's META $10 billion investment in Northern Louisiana and Amazon.com Inc's AMZN $10 billion spend in Mississippi, the trend is clear: AI needs juice, and Entergy is becoming the go-to provider.
Vistra: Hold Onto That Power Feeling
Vistra isn't just another independent power producer (IPP)—it's JPMorgan's top pick among IPPs (independent power producers), with a strong balance of natural gas leverage and nuclear opportunity. The firm sees manufacturing onshoring, electrification, and relentless data center demand driving power prices higher, and Vistra is positioned to capitalize.
While competitors like Constellation Energy Corp CEG and Talen Energy Corp TLN also have nuclear exposure, JPMorgan believes Vistra offers the best risk/reward balance, thanks to its Permian and Appalachia gas assets and strategic flexibility.
NiSource: A Sleeper Bet On Load Growth
NiSource may not have Entergy's headline-grabbing hyperscaler deals, but it's quietly benefiting from the same secular trends.
JPMorgan sees broader electrification and industrial demand bolstering NiSource's long-term growth, making it a strong contender for utility investors looking beyond the AI gold rush.
The Big Picture
JPMorgan believes 2024's power demand boom is just getting started, and utilities with data center exposure are in pole position.
While Entergy leads the pack with another possible hyperscaler deal, Vistra's diversified portfolio and NiSource's steady growth make them standout picks ahead of earnings.
For investors betting on AI's insatiable energy appetite, these utilities might just be the next big trade.
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