AES Valuation Check After Analyst Upgrades on Data Center and EV-Driven Growth Prospects
December 24, 2025
The accelerating electricity demand from artificial intelligence data centers and electric vehicle infrastructure is reshaping the power sector, creating significant growth opportunities for utilities with the capacity to build and supply. AES Corporation (AES) has become a focal point for this narrative, receiving recent analyst upgrades that highlight its strategic positioning to capture this emerging demand, particularly in the U.S. Midwest.
The market sentiment toward AES has shown marked improvement, reflected in a share price return of roughly 7 percent over the last 90 days and a total shareholder return of 13.8 percent over one year. This rebound follows a period of multi-year underperformance and comes as analysts point to a substantial intrinsic value discount. With AES shares last closing at $13.96—below a narrative fair value estimate of $15.29, implying the stock is approximately 8.7 percent undervalued—investors are weighing whether the current price represents an early entry point.
Central to the bullish case is AES's extensive pipeline of renewable energy and storage projects, secured by long-term Power Purchase Agreements (PPAs) with corporate and data center clients. This backlog provides visibility into future cash flows and positions the company to benefit directly from the rapid growth in power consumption driven by AI and electrification. The company's ability to translate this contracted project pipeline into accelerating revenue growth is a key driver behind the improved earnings outlook.
However, the path forward is not without risk. Industry analysts note that persistent delays in grid interconnection queues or shifts in policy supporting renewable energy incentives could pressure margins and slow the anticipated ramp in earnings. These factors represent potential headwinds to the company's growth trajectory.
For the broader energy sector, AES's situation underscores a critical trend: utilities with robust renewable development platforms and the ability to secure long-term contracts for clean power are increasingly viewed as essential partners in the digital and electric mobility transition. Their success in executing on these projects will be a key indicator of the sector's capacity to meet soaring, next-generation electricity demand.
Source: Yahoo
