Key insights
- Goldman Sachs highlights American Electric Power and Xcel Energy as attractive utility stocks before Q1 earnings, citing potential for increased capital expenditure guidance related to AI and data center demand. Positive updates on capex and load outlooks could signal stronger earnings growth. This suggests a bullish outlook for select utilities with exposure to emerging technologies and proactive capital management.
Investing.com -- Goldman Sachs outlined three U.S. utility stocks to consider going into the first-quarter earnings season, with the investment bank flagging a focus on capital expenditures, artificial intelligence exposure, and regulatory risks.
Goldman Sachs maintained Buy ratings on all three stocks, flagging the potential for some companies to provide "meaning updates" around their load and capex outlooks, which could in turn herald stronger earnings growth.
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American Electric Power
Goldman Sachs views American Electric Power as well positioned heading into its first-quarter 2026 earnings report. American Electric Power has been proactive regarding large load tariffs, positioning it favorably from an affordability perspective. The company has identified $5 billion to $8 billion of incremental capital expenditure opportunities beyond its $72 billion base capital plan, with additional opportunities under consideration. Goldman Sachs expects the upcoming earnings call to provide details on funding for this incremental spending and an update on the capex upside bucket. While management has indicated an interim capital plan update could come before the traditional third-quarter update, Goldman Sachs sees greater potential for this information to be shared on the second-quarter call, particularly if conditions are met to close the Bloom transaction.
Xcel Energy
Goldman Sachs maintains a constructive stance on Xcel Energy ahead of its first-quarter 2026 earnings call. The firm reiterates expectations for the company to continue growing earnings at approximately 9% compound annual growth rate through 2030. During the previous quarter’s call, Xcel Energy outlined roughly $10 billion in incremental capital expenditure opportunities outside its current plan. These opportunities relate to outstanding requests for proposals, transmission awards, and data center demand. Goldman Sachs anticipates additional details on this incremental capital spending and the timeline for incorporating it into the company’s formal plan.
NextEra Energy
Goldman Sachs said Nextera presented the most earnings upside potential relative to market expectations in the first-quarter. The investment bank forecast more upside for Nextera from a potential large load announcement in Florida this year, and said the company was also well-positioned in serving data center customers. The company faces a favorable regulatory environment in Florida, leaving it capable of growing capacity in the state despite recent supply chain constraints.
NextEra Energy was recently linked in press reports to the development of major natural gas power plants in Pennsylvania and Texas.
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