NextEra Energy’s Strategic Pivot to Power the AI Boom

NextEra Energy is executing a significant strategic shift, navigating a challenging period for utility stocks while aggressively targeting one of the fastest-growing power markets: data centers. This long-term growth strategy, focused on structural expansion, contrasts with the current sector-wide weakness impacting its share price.

Recent quarterly results provided a robust counterpoint to broader sector concerns. NextEra Energy reported earnings of $1.13 per share, surpassing analyst estimates of $1.04. Furthermore, the company has raised its earnings guidance for both 2025 and 2026.

Analyst sentiment largely reflects this positive long-term outlook. The consensus rating stands at "Moderate Buy," with an average price target of approximately $91.56. This suggests a potential upside of around 14% from current levels. Firms including JPMorgan, UBS, and BMO Capital have recently reaffirmed their positive assessments.

However, the stock's valuation remains a topic of debate. Trading with a price-to-earnings (P/E) ratio near 26, it commands a premium compared to the sector average of 19.5. While some models indicate overvaluation, other observers consider the P/E ratio attractive for long-term investors, given the company's growth profile and profitability. The shares are currently priced at €68.15, having declined roughly 6.8% over the past month—a performance in line with the sector. The next major test for the growth narrative will be next year's quarterly results, for which analysts are already forecasting earnings growth exceeding 20%.

Should investors sell immediately? Or is it worth buying NextEra Energy?

Capitalizing on the Data Center Power Demand Surge

The core of the company's growth story is a deliberate pivot to serve the booming data center industry. NextEra Energy has outlined plans to build 15 gigawatts of new generation capacity specifically for U.S. data centers by 2035. This massive initiative is designed to meet the exploding electricity needs of these energy-intensive facilities.

Substantial partnerships already underpin this strategy:
* An expanded collaboration with Google focuses on developing three gigawatt-scale data center campuses.
* Agreements with Meta include 11 power purchase agreements (PPAs) and two energy storage deals, totaling 2.5 GW of clean energy. These projects are scheduled to come online between 2026 and 2028.

Company leadership emphasizes that renewables and storage solutions are the primary long-term growth drivers, with nuclear and natural gas assets expected to contribute from 2029 onward. This approach is further supported by continued investment in grid infrastructure, such as a planned high-voltage transmission project in Pennsylvania and West Virginia.