Shares of the U.S. power utility AES Corporation are entering a period of consolidation, following a recent surge driven by market speculation regarding a potential acquisition. Investor attention is now shifting back to the company’s operational execution and its substantial project pipeline, which continues to underpin its current valuation. The equity has advanced by 2.5 percent over the past week, signaling a stabilization in market sentiment.
Data Center Demand Powers Growth Strategy
A fundamental growth driver for AES is its robust pipeline of projects, which totals 11.1 gigawatts (GW). A key catalyst for this expansion is soaring demand from the technology sector. Notably, nearly half of the company’s recently signed power purchase agreements (PPAs) are directly linked to supplying data centers. This strategic connection to the booming artificial intelligence and cloud computing infrastructure provides AES with a clear earnings outlook for the coming years.
The company remains on track with its 2025 construction targets. Specific progress includes:
* Completion of 2.9 GW out of the 3.2 GW planned for the fiscal year.
* A growth plan through 2027 targeting a steady 5 to 7 percent increase in EBITDA.
* The 11.1 GW project portfolio ensuring long-term visibility for the utility business.
* Data center contracts constituting approximately 50 percent of recently finalized agreements.
Market Analysts Note a Valuation Gap
The prevailing market mood toward AES is neutral, as volatility persists in the wake of earlier takeover rumors. While speculation about a potential bid intensified during the fourth quarter, the subsequent lack of concrete announcements has led to a pullback from previous peaks. Market researchers currently maintain a “Moderate Buy” consensus, pointing to a discrepancy between the present share price and the intrinsic value of the company’s renewable energy portfolio.
Should investors sell immediately? Or is it worth buying AES?
The stock is currently seeking a floor, having retreated roughly 10 percent from its 52-week high reached in October. Present technical indicators suggest a neutral trend. Despite this short-term caution, the underlying fundamentals—including a 7.7 percent gain since the start of the year—imply that the longer-term upward trajectory remains intact.
Energy Transition and Shifting Customer Base
The rapid build-out of AI-driven data centers is catapulting demand for reliable power from U.S. utilities. AES has secured several high-capacity supply contracts, positioning the firm as a critical infrastructure partner. This shift in clientele from traditional residential customers to large-scale industrial consumers is altering the risk profile of its revenue streams.
The transition from coal-based to gas and renewable energy sources at major facilities, such as the Petersburg units, is proceeding according to schedule. This strategic move reduces the company’s exposure to carbon-related regulatory risks while simultaneously securing higher-margin industrial contracts. The execution of this investment plan continues to be the primary focus for institutional investors heading into the next year.
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