9 Best AI Energy Infrastructure Stocks to Buy Now

4. Diamondback Energy Inc (NASDAQ:FANG)

Number of Hedge Fund Investors: 44

Diamondback Energy Inc (NASDAQ:FANG) is one of the top energy stocks in Tortoise Capital Advisors portfolio.

Diamondback is an oil and gas company and while it is not directly exposed to data centers or AI, a broader shift and demand in the market amid the AI revolution will certainly impact the stock positively. Diamondback Energy Inc (NASDAQ:FANG) is also seeing changes amid electrification in the oil and gas industry. About 95% of its field is on the grid, versus 60% a few years ago, while half of its oil well completion operations and roughly 75% of its drilling equipment are running on grid power.

Diamondback Energy Inc (NASDAQ:FANG)  is a high-yield dividend stock, with over 4.5% yield as of July 14.

Diamondback’s strategy is built on four key components: maintaining low-cost production to outcompete rivals, selectively pursuing M&A to expand its footprint and achieve economies of scale, returning significant free cash flow to shareholders, and adopting a flexible approach focused on growth. As a smaller, independent U.S. energy company, Diamondback Energy Inc (NASDAQ:FANG) is rapidly expanding and leveraging its strengths, particularly its prime acreage in the Permian Basin.  Diamondback Energy Inc (NASDAQ:FANG) has 10% of its operations in the Delaware Basin in the western Permian, while  90% of its current operations are within the Midland Basin to the east.

ClearBridge Select Strategy stated the following regarding Diamondback Energy, Inc. (NASDAQ:FANG) in its first quarter 2024 investor letter:

Our final addition was Diamondback Energy, Inc. (NASDAQ:FANG), a leading oil and gas producer that agreed to acquire fellow exploration and production company Endeavor Energy Resources in the quarter. The deal should allow Diamondback to capture operating synergies and streamline costs by reducing rig redundancies and optimizing production techniques. Endeavor has previously prioritized double-digit production growth over capital discipline, leading to the quick depletion of its core inventory in the oil-rich Midland Basin. Diamondback’s focus on free cash flow generation should allow the combined entity, which we consider an evolving opportunity, to rein back its production levels and extend the longevity of this high-quality acreage to fund cash returns. Diamondback replaces the energy exposure the portfolio will lose with the pending acquisition of top 15 holding Pioneer Natural Resources by Exxon Mobil.