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Trump called AI data centers “the oil” of the next 25 years as consumers reckon with the environmental toll and high costs to communities.
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Following the Federal Reserve's 25 basis point rate increase in September 2026, alternative energy companies face headwinds from higher financing costs. However, three companies—Montauk Renewables, Constellation Energy, and TXNM Energy—demonstrate strong fundamentals with solid interest coverage ratios and significant earnings growth projected for 2026, positioning them to weather the higher rate environment.
Morgan Stanley analyst David Arcaro maintains Constellation Energy (NASDAQ:CEG) with a Overweight and raises the price target from $364 to $369.
Constellation Energy and Vistra are both capitalizing on AI-driven electricity demand, with stocks up 137% and 330% respectively over three years. Constellation focuses on nuclear power (22 GW capacity), while Vistra is more diversified with natural gas (62% of capacity) and smaller nuclear operations (15%). The analyst recommends Vistra as the better buy due to its lower valuation (9x 2026 EBITDA vs. Constellation's 21x P/E), greater diversification, and stronger exposure to natural gas, which powers most U.S. data centers.
GE Vernova shares are trading flat Friday as investors continue to weigh robust backlog growth showcased at a major industry conference.
The global gas turbine market is projected to grow at a 5.40% CAGR from 2026 to 2035, driven by coal-to-gas power plant conversions, AI-driven data center demand, and adoption of hydrogen and ammonia-ready combustion technologies. North America leads with 29.50% market share, while Asia Pacific records the fastest growth at 8.30% CAGR. Data centers emerge as the fastest-growing sector with 11.20% CAGR.