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The U.S. utility sector is experiencing a surge in electricity demand, driven largely by the growth of artificial intelligence and data center infrastructure. In September 2023, U.S. power demand increased by 2.3% year-over-year, with significant growth attributed to major data center hubs (FactSet). Key utility companies PG&E Corp. and CenterPoint Energy are scheduled to release their third-quarter earnings, following a strong report from FirstEnergy, which posted better-than-expected revenues and earnings.
Investors anticipate PG&E Corp. will report earnings of 46 cents per share on revenues of $6.55 billion, marking a 24.3% increase in bottom-line growth. Similarly, CenterPoint Energy is expected to report earnings of 46 cents per share with revenues of $1.98 billion, reflecting a 48.4% growth in earnings year-over-year. However, overall utility sector earnings are projected to decline by 2.4% despite a revenue increase of 5.8% in the third quarter.
The sector’s growth outlook is tempered by rising financial costs associated with infrastructure investments, influenced by the recent Federal Reserve rate cuts. Investors are advised to monitor how utilities manage their capital amid these pressures.
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