This Power Stock Could Be a Big Winner From the Data Center Boom
Key Points
Vistra is a diversified power producer positioned for rising grid demand, yet it still trades at a reasonable valuation.
Growing electricity demand and hyperscaler deals are pointing to strong earnings growth.
Even with regulatory, weather, and possible grid-connection delays, the stock's valuation looks attractive versus its projected earnings growth.
- 10 stocks we like better than Vistra ›
Data centers, manufacturing, and electric vehicles (EVs) will put greater strain on the electric grid in the coming decades, requiring massive investment in energy infrastructure. Vistra (NYSE: VST) is well positioned to meet this demand, with over 44 gigawatts of power-generating capacity across natural gas, nuclear, coal, renewables, and other sources.
Despite this opportunity, the stock trades at a reasonable forward price-to-earnings (P/E) multiple of 18. This could set up excellent returns in a growing-demand environment.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
Strong demand outlook
The growing demand for electricity provides a bullish setup for the stock. Vistra expects annual load growth to increase by 5% to 6% in the Texas power market and by 2% to 3% in the Mid-Atlantic and Midwest regions through 2030.
The company is capitalizing on the substantial increase in data center spending, driven by leading hyperscalers running advanced artificial intelligence (AI) workloads. It has signed long-term purchase agreements with Meta Platforms for over 2.6 gigawatts of nuclear power. It has a similar agreement with Amazon Web Services (AWS) and remains in talks with other large-load customers, pointing to additional demand ahead.
The company has also shown it can run efficiently even in difficult conditions. Despite volatile weather in the first quarter, it delivered a healthy Q1 adjusted operating profit of $1.5 billion, with full-year adjusted operating profit expected to be $6.8 billion to $7.6 billion.
Further growth in electricity demand could translate into meaningful earnings growth over the long term. For a broader market context, the International Energy Agency (IEA) expects data centers, EVs, and industrial activity to drive 3.5% annual growth in electricity demand through 2030.
Natural gas should remain one of the key sources supporting that demand, which plays to Vistra's strengths. Natural gas generation represents 62% of its capacity and should grow with its pending acquisition of Cogentrix, which would add about 5.5 gigawatts of natural gas generation assets.
Risks and growth expectations
There are risks to watch, including bottlenecks in data center expansion and delays in grid connections. Shifting weather patterns, regulation, and power prices in Texas could also pressure Vistra's revenue growth.
Still, the stock's valuation already appears to reflect some of those risks. Although analysts forecast earnings to grow at a 37% annualized rate in the coming years, the stock trades at a modest forward PEG ratio (forward P/E divided by expected earnings growth) of about 0.5x.
Vistra's integrated model -- producing power and selling it directly to customers -- should support growing earnings over time. Its deals with leading hyperscalers suggest it's an under-the-radar way to benefit from the data center spending wave.
Should you buy stock in Vistra right now?
Before you buy stock in Vistra, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vistra wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,405!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,344,091!*
Now, it’s worth noting Stock Advisor’s total average return is 953% — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of August 7, 2026.
John Ballard has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Vistra. The Motley Fool has a disclosure policy.
Recommended Articles
