AI data centers and other catalysts are driving an acceleration in electricity demand.
Several leading utilities are capitalizing on the surge in demand.
They’re in strong positions to grow at above-average rates in 2026 and beyond.
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Utility stocks are quietly having a solid year. The value of one of the largest utility ETFs, the State Street Utilities Select Sector ETFis up nearly 10% on the year. Many individual utilities are having even stronger years.
Next year could be even better for utility stocks as power demand from AI data centers continues to surge. Here are three utilities that could soar in 2026.
Image source: Getty Images.
Constellation Energy(NASDAQ: CEG) is having a monster year. The power producer’s share price has surged nearly 50%. A big catalyst has been the resurgence in demand for nuclear energy over the past year.
In late 2024, Constellation Energy helped reignite the country’s nuclear renaissance by signing a 20-year power purchase agreement with Microsoft to restart its dormant Three Mile Island Unit 1 generation facility. The tech titan will buy 100% of the facility’s power when it comes back online in 2028 to support its data center operations. Constellation Energy followed that up with a 20-year deal with Meta Platforms to purchase all the power produced from the Clinton Clean Energy Center starting in the middle of 2027, preventing the premature closure of that facility.
While nuclear energy has been Constellation’s main catalyst over the past year, a new one could emerge in 2026. The company agreed to buy Calpine in a $26.6 billion deal earlier this year. The transformational transaction will combine Constellation’s premier nuclear fleet with Calpine’s leading natural gas and geothermal assets. The merger, which could close in early 2026, will provide a meaningful earnings boost next year while enhancing the company’s ability to capitalize on growing power demand in the future.Constellation expects to grow its earnings at a more than 10% annual rate through 2028.
Dominion Energy(NYSE: D) has underperformed its utility peers over the past year, only rising about 6%. However, the power company is in a strong position to capitalize on the growing power demand by data centers.
The company owns Dominion Energy Virginia, a leading electric utility in a state that has been a hotbed for data centers. Northern Virginia is the largest data center market in the world (13% of global operating capacity and 25% of capacity in the Americas). Current forecasts anticipate that power demand in the state could double within the next decade, driven largely by data centers.
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Dominion is investing heavily to capitalize on the coming surge in power demand in the state. It currently plans to invest $50 billion across its operations through 2029, with the bulk of that capital earmarked for Virginia. That includes capital spending for its massive Coastal Virginia Offshore Wind project that should start producing power next year.These heavy investments should support 5% to 7% annual earnings-per-share growth through the end of the decade, a strong rate for a utility.
NextEra Energy(NYSE: NO) has surged nearly 11% over the past year. The power company has benefited from operating the largest electric utility in Florida and owning a leading clean energy infrastructure development platform.
The company is investing heavily to support Florida’s growing economy, including capitalizing on its abundance of sunshine to build the biggest utility-owned solar energy platform. Additionally, it continues to develop clean power infrastructure to support the country’s surging electricity demands. It has a large and growing backlog of renewable energy projects that it expects to complete over the coming years.
These investments position NextEra Energy to deliver earnings growth at or near the high end of its 6% to 8% annual target range through 2027. The company also plans to increase its dividend by around a 10% annual rate through at least next year. Meanwhile, the company has increasing visibility into its growth beyond that time frame. It recently joined the nuclear resurgence by signing a 25-year power deal with Google to support the restart of its Duane Arnold Energy Center, which it expects will be back online by the first quarter of 2029.
Utility stocks have rebounded this year, powered by the anticipated surge in electricity demand from AI data centers. Constellation Energy, Dominion Energy, and NextEra Energy are among the best-positioned utilities to capitalize on this megatrend. It could give them the power to continue soaring in 2026.
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Matt DiLallo has positions in Alphabet, Meta Platforms, and NextEra Energy. The Motley Fool has positions in and recommends Alphabet, Constellation Energy, Meta Platforms, Microsoft, and NextEra Energy. The Motley Fool recommends Dominion Energy and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Utility Stocks Are Rebounding. Here Are 3 That Could Continue to Soar In 2026. was originally published by The Motley Fool
