Data centers, artificial intelligence (AI), and related infrastructure continue to be among the biggest investment themes in the stock market. But perhaps an overlooked opportunity lies with utility companies — the businesses that will supply power to data centers coming online across the country.
Billionaire investor George Soros appears to be taking that bet. His Soros Fund Management opened a new stake in American Electric Power (AEP) in the second quarter, buying 768,000 shares valued at $105.1 million.
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Soros’ fund also increased its stake in another utility company, Entergy (ETR), which supplies power to customers in Arkansas, Louisiana, Mississippi, and Texas. The fund increased its stake from 77,000 shares to 914,000 shares in Q2. The fund opened a new position in Nebius Group (NBIS) as well, which is building data centers in the U.S. and overseas. Soros Fund Management now has 310,000 shares of Nebius valued at $85.6 million.
The investments in utility companies make a lot of sense. In a new report, the International Energy Agency (IEA) noted that global electricity demand is accelerating, from 3% growth in 2025 to 3.6% this year and 3.8% in 2027, with demand from data centers and electric vehicles (EVs) playing a significant role.
Should you have a utility company like AEP in your portfolio? Let's take a closer look.
About American Electric Power Stock
American Electric Power is one of the biggest public utility companies in the U.S. with a wide service area that covers 11 states in the Midwest and South, including parts of Virginia and West Virginia. The company serves some 5.6 million customers and operates under a variety of business segments. Based in Columbus, Ohio, American Electric Power has a market capitalization of $67 billion.
Shares of AEP stock are up almost 9% in the last year, which is better than the 1% gain of the S&P 500 Utilities Sector (XLU). However, the performance badly lags the 19% return of the S&P 500 ($SPX).
www.barchart.com AEP stock trades at a forward price-to-earnings (P/E) ratio of 19.2 times, which is in-line with its five-year forward P/E mean. So, shares are right at where AEP stock is historically valued.
As is often the case with utility companies, AEP stock offers a solid dividend, yielding 3.1% with 16 consecutive years of dividend increases. So, the stock is a solid choice for a dividend portfolio.
AEP Misses on Earnings
American Electric Power’s Q2 earnings report not only saw the company miss analysts’ expectations, but also resulted in lower earnings on a year-over-year (YOY) basis. Revenue for the quarter was $5.44 billion, up from $5.09 billion a year ago. Operating earnings fell from $766 million to $742 million, while EPS came in at $1.36, down from $1.43 a year ago and below expectations for $1.49. Management attributed the miss to the timing of tax-related items and a 2025 transmission minority interest sale.
The company reported increased demand for power from AI-focused hyperscalers, with the demand in Texas particularly strong. However, grid and transmission constraints could have an effect on new connections.
AEP secured 69 gigawatts of contracted load through 2030, including 45 GW in Texas that are backed by executed agreements and nearly $2 billion in customer cash or collateral. In Q2, AEP signed 6 GW of new load agreements and secured another 3 GW of gas-fired turbine capacity that increases the company’s total secured capacity to 13 GW through 2031.
The company is also evaluating up to 10 GW of additional capacity through 2035 to meet growing electricity demand, and management remains bullish on AEP's prospects in the second half of the year.
“I am highly confident in our robust business performance — so much so that we are raising 2026 full-year guidance to $6.25 to $6.55 per share,” said CEO Bill Fehrman. AEP also reaffirmed its annual operating earnings growth rate of 7% to 9% through 2030, with an expected operating earnings compound annual growth rate (CAGR) of more than 9%.
What Do Analysts Expect for AEP Stock?
Sentiment for AEP stock is largely positive, with 24 analysts giving it a consensus “Moderate Buy” rating. Analysts are split, with 11 suggesting a “Strong Buy” rating and one suggesting a “Moderate Buy” versus 12 analysts with a “Hold” rating. The consensus price target of $141.86 represents potential upside of 16% from current levels.
Notably, Soros’ two major utility stock purchases in Q2 are companies that operate in Texas, which historically has been seen as an ideal place for data centers to operate thanks to the amount of available land, business-friendly regulatory environment, and an electrical grid that has allowed industrial projects to hook up faster than in other regions.
However, the landscape for data centers seems to be evolving in Texas. Gov. Greg Abbott has ordered the Electric Reliability Council of Texas and public regulators to halt new data-center grid connections while auditing pending projects. Abbott recently said that data-center companies have “dug their own grave” in not winning over community support.
While a slowdown in data-center connections could impact hyperscalers, chipmakers, and data-center builders like Nebius, I don’t see it changing the calculus for AEP and other utility companies. If nothing else, the slowdown will help prevent the utility grid from overloading or breaking down. However, it’s worth monitoring as data-center growth has become a hot-button issue.
www.barchart.com On the date of publication, Patrick Sanders had a position in: NBIS . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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