The rise of generative AI and quantum computing has sparked a technological revolution, but behind this growth lies an urgent challenge. As AI models grow more advanced, the data centers powering them are consuming unprecedented amounts of energy. Industry leaders are now faced with the dual challenge of meeting soaring demand while minimizing environmental impact. To meet the surging energy demands of AI, tech giants are turning to nuclear energy. Multi-billion-dollar deals have been signed to secure reliable and low-carbon energy sources.
At the same time, energy companies are positioning themselves as pivotal players in the evolving intersection of energy and AI infrastructure, emphasizing their capability to provide reliable, lower-carbon energy solutions. Major Oil and Gas companies are also advancing into the race to supply power for AI data centers, anticipating that tech companies will increasingly rely on natural gas to meet their growing energy demands. Exxon CEO Darren Woods stressed that decarbonized natural gas plants offer a quicker solution to meet tech companies’ energy needs compared to nuclear power, which involves lengthy development timelines.
2025 Oil Market Outlook: Prices to Fall
On December 18, CNBC reported that oil prices in 2025 are expected to decline due to a looming surplus in the global market, rather than any immediate actions by President-elect Donald Trump. As Trump prepares to assume office on January 20, 2025, the U.S., the world’s largest oil producer, continues to pump record amounts of crude, while demand from China, the world’s largest oil importer, slows amid economic headwinds.
Market analysts foresee U.S. crude oil prices averaging around $61 per barrel and Brent crude at $65 per barrel in 2025, according to forecasts from Bank of America and RBC Capital Markets. These projections represent a decline of over $8 from current levels. UBS presents a more moderate outlook, predicting Brent prices to average around $80 per barrel, supported by stronger demand and a narrower surplus.
While Trump has expressed a desire for lower energy prices, geopolitical factors could counteract his goals. If the Trump administration reinstates stricter measures on Iranian and Venezuelan oil exports, prices might rise instead of falling, according to Jorge Leon of Rystad Energy. However, any potential tariffs Trump may impose are unlikely to significantly impact global demand until 2026.
The evolving energy landscape is being shaped by the growing demands of AI infrastructure, advancements in cleaner energy solutions, and shifting global market dynamics. As tech giants increasingly turn to energy companies to meet their energy needs, companies are positioning themselves at the forefront of this transformation. With that in context, let’s take a look at the 12 best energy stocks to invest in now.
An aerial view of an energy refinery, with massive tanks and piping defining the landscape.
Our Methodology
To compile our list of the 12 best energy stocks to invest in now, we used Finviz and Yahoo stock screeners to find the 30 largest energy companies. Then we used Insider Monkey’s Hedge Fund database to rank 12 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
12 Best Energy Stocks To Invest In Now
12. Shell plc (NYSE:SHEL)
Number of Hedge Fund Investors: 48
Shell plc (NYSE:SHEL) is one of the world’s largest integrated energy companies, operating across the entire oil and gas value chain, and is involved in exploration, production, refining, and distribution. The company generates revenue through the extraction and sale of oil and natural gas, as well as refining and marketing petroleum products.
Shell plc (NYSE:SHEL) is making significant strides in its integrated gas business, particularly in liquefied natural gas (LNG). The company has a robust portfolio of LNG projects, including the recent startup of Mero-3 in Brazil and the ongoing development of LNG Canada. These projects are part of the company’s strategy to capitalize on its leading position in the LNG market. The company’s trading capabilities and global reach allow it to optimize its LNG portfolio, ensuring that it can meet the growing demand for energy sources. Shell plc’s (NYSE:SHEL) focus on LNG is driven by its belief that natural gas will play a foundational role in the energy transition over the next few decades, making it a critical component of the company’s long-term strategy.
Shell plc (NYSE:SHEL) is also selectively investing in high-value opportunities across its portfolio. In the upstream segment, the company is focusing on deep-water projects in the Gulf of Mexico and Brazil, where it has a strong competitive advantage. The recent final investment decision on the second phase of the Vito project in the Gulf of Mexico and the startup of Mero-3 in Brazil are examples of this strategy. Shell plc (NYSE:SHEL) is also exploring opportunities in new basins, such as Namibia, where it has been involved in exploration activities and is closely monitoring the progress of other players in the region. While the company is cautious about the challenges in Namibia, it is committed to finding commercially viable projects that align with its high bar for investments.
11. Cenovus Energy Inc. (NYSE:CVE)
Number of Hedge Fund Investors: 48
Cenovus Energy Inc. (NYSE:CVE) is a Canadian integrated energy company based in Canada, with a strong presence in the oil sands, conventional oil and gas, and offshore oil and gas extraction. The company also operates refining and upgrading facilities in partnership with other industry players. Cenovus Energy Inc. (NYSE:CVE) sells oil, refined products, and natural gas to domestic and international markets.
Cenovus Energy Inc. (NYSE:CVE) is focusing on expanding its oil sand production through key projects such as the Narrows Lake expansion and the Sunrise and Foster Creek Optimization Project. These projects are expected to add 20,000 to 30,000 barrels per day of production, with the first oil anticipated in mid-2025. Moreover, the company is making significant progress on the West White Rose project, an offshore oil development in the Atlantic region. The project is 85% complete, and the gravity-based structure (GBS) is nearing mechanical completion. The topsides are also well advanced, with commissioning underway. Cenovus Energy Inc. (NYSE:CVE) expects to see the first oil from this project in 2026, which will contribute significantly to free cash flow and production growth.
Cenovus Energy Inc. (NYSE:CVE) is also focusing on improving the reliability and efficiency of its refineries, particularly in the U.S., where it has been addressing historical reliability issues and making targeted investments to enhance performance. The company aims to capture more value from the integrated value chain by improving asset reliability, lowering costs, and optimizing commercial opportunities across its network.