Hyperscalers Like Amazon, Oracle, and Meta Stock Are Powering a Utility Stock Revival

AI’s soaring energy demand is sparking a new growth cycle for utilities. It is also driving earnings forecasts higher and prompting renewed merger interest among smaller power providers.

Artificial intelligence needs electricity. Hyperscalers like Microsoft (MSFT), Oracle (ORCL), Meta (META), Alphabet (GOOGL), and Amazon (AMZN) keep adding data centers, and those campuses run on huge, steady loads. Utilities must build the plants and wires to serve them, and that spending flows into the regulated “rate base.”

As utilities grow that rate base, regulators allow a return on it. This is how earnings rise in this business. Moreover, the build cycle often lasts longer than the data center construction, which can extend the growth runway for years.

Utilities Build Rate Base and Lift Earnings

Forecasts already reflect the step-up. Analysts see aggregate earnings per share for major utilities growing about 8.8% annually through 2027, compared with roughly 7% this year. The lift comes even though residential demand grows more slowly.

Investors care because regulated models convert capital spending into predictable profit. In addition, the surge in AI demand arrives while financing costs are easing, which can improve project economics and support valuations.

Bigger Players Kick Off a Deal Hunt

Scale is important in this build-out. There are thousands of electric providers across the country, which makes consolidation a straightforward way to find cost savings. Mergers can remove overlapping expenses, streamline procurement, and tighten operations, even if revenue synergies are limited under regulation.

Recent deal flow hints at more to come. Private equity and infrastructure funds are circling, and strategic buyers want growth. Furthermore, pending transactions show that regulators will engage, which keeps boards open to credible bids.

Smaller Names Invite Bids and Capital

Smaller, service-territory utilities look especially exposed to offers. Names like AES (AES), Idacorp (IDA), Avista (AVA), and Portland General Electric (POR) sit under the ten billion dollar market cap line, which makes financing a takeout easier. Their territories often overlap with data center corridors, adding a tangible growth story.

Avista stands out. It serves parts of Oregon, Montana, Idaho, and Washington, near hundreds of existing and planned data centers. Analysts expect its asset base and earnings per share to grow at close to 8% annually over the next two years, up from about 2% last year. The combination of location and acceleration is what acquirers like to see.

In the end, utility profits will rise where real construction happens. Investors should track interconnection queues, new plant approvals, and long-term power contracts tied to AI campuses. State commission decisions will also matter, since timelines and allowed returns can shape how fast these projects turn into earnings.

Investors can compare the utility stocks mentioned in this article on the TipRanks Stocks Comparison tool. Click on the image below to find out more.