We recently published a list of 9 Best AI Energy Infrastructure Stocks to Buy Now. Since EQT Corp (NYSE:EQT) ranks 6th on the list, it deserves a deeper look.
Rob Thummel, senior portfolio manager at Tortoise Capital Advisors, while talking to CNBC in a latest program, said that he sees a big opportunity for AI in the energy industry. Thummel said that while everybody keeps talking about technology infrastructure when it comes to AI, they “forget” about energy infrastructure.
Thummel said that AI will create electricity demand that will in turn fuel the need for natural gas.
“There is no AI without EI (energy infrastructure) because you need this critical infrastructure to provide the fuel to keep their lights on and electricity flowing 24 hours a day.”
Talking about energy stocks, Thummel said a lot of them are “pretty simple stories” as they generate a lot of cash flows and return a significant portion of it back to shareholders.
Asked about the cyclical nature of the industry, Thummel said that global energy demand is currently at its peak and has grown for 38 years over the last four decades. The analyst said the demand for energy increases every year across the world. Thummel said the US has become the largest energy exporter and he does not see that changing for a long time.
Thummel also shared some of his top picks in the energy sector. For this article we scanned his portfolio and chose his top AI energy infrastructure picks. With each stock we have mentioned the total number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? 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).
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EQT Corp (NYSE:EQT)
Number of Hedge Fund Investors: 41
Natural gas company EQT Corp (NYSE:EQT) is one of the best AI energy infrastructure stocks in Tortoise Capital Advisors portfolio.
Goldman Sachs earlier this year named EQT Corp (NYSE:EQT) among the companies that will benefit from the surge in natural gas on the back of data centers. Goldman Sachs believes natural gas will provide about 60% of the new electricity demand from data centers.
During Q1 earnings call EQT Corp (NYSE:EQT) management talked in details about how data centers and AI would boost its business.
Along with the material cost-structured vantage, the combination of EQT and Equitrans will also create an integrated well-to-watt solution that will help enable and power growing demand associated with the data center and artificial intelligence booms that are burgeoning across the Southeast and Mid-Atlantic regions of the United States.
Our base case view suggests the proliferation of data centers, along with growth in other electricity-intensive markets, such as electric vehicles, to drive an incremental 10 Bcf per day of natural gas demand by 2030, while there is a plausible upside case that could take this number up to 18 Bcf per day. This means growth in the power generation segment could exceed LNG exports as a bullish demand catalyst for the natural gas market this decade, and this structural base-low demand growth story resides at the doorstep of our asset base. Our 1.2 Bcf per day of capacity on MVP, along with the long-term firm sales arrangements we announced with investment grade utilities last year, means EQT Corp (NYSE:EQT) low emissions natural gas will be a key facilitator of the data center buildout occurring in the Southeastern United States and will give us significant exposure to premium Transco Zones 4 and 5 price points.
Read the entire earnings call transcript here.
EQT Corp (NYSE:EQT) shares have lost about 4% this year. There have been concerns about lower natural gas demand amid warner winters. However, analysts believe natural gas demand will begin to increase in early 2025 while AI-driven electricity demand surge is almost guaranteed to help EQT Corp (NYSE:EQT) solve demand-related headwinds. EQT is behind a pure-play Marcellus Shale natural gas field in Appalachia. EQT Corp (NYSE:EQT) controls approximately 200,000 acres in northeast Pennsylvania, around 70,000 acres in eastern Ohio, 460,000 acres in southwest Pennsylvania, and 370,000 acres in West Virginia.
Average analyst price target on the stock is $44, which presents a 20% upside potential from the current levels.
Overall, EQT Corp (NYSE:EQT) ranks 6th on Insider Monkey’s list titled 9 Best AI Energy Infrastructure Stocks to Buy Now. While we acknowledge the potential of EQT Corp (NYSE:EQT), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than EQT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.