Shares of Vistra Corporation (VST -1.46%) rallied 40.6% in the first half of the year, according to data from S&P Global Market Intelligence.
Vistra had already rallied 258% in 2024, making its first half performance all the more remarkable. As one of only a few publicly traded power producers with existing nuclear capacity, which was augmented by last year's acquisition of Energy Harbor, Vistra has emerged as a presumptive artificial intelligence winner.
Like many AI-related stocks, Vistra rallied almost to first-half highs in January, before the release of China's DeepSeek R1 and Trump's tariff war caused a major AI sell-off.
Yet also like other AI winners, Vistra recovered as it delivered strong results and a strong outlook, with artificial intelligence and its associated electricity demand growth seemingly intact.
Vistra's volatile path to 40% gains
While one doesn't think of utilities as high-growth stocks, electricity demand is reaccelerating because of AI data center growth. U.S. electricity demand has actually been relatively flat since 2009, because of energy efficiency initiatives. However, the International Energy Agency sees demand accelerating to 2% annualized growth. For its part, Vistra sees its load growth accelerating to a 4% growth rate through 2030.
With the need to serve that increased demand in a low-carbon manner, that means nuclear energy is now in high demand. Vistra is one of just a few U.S. power producers that owns an existing nuclear capacity, especially after acquiring Energy Harbor in March 2024. With the acquisition, Vistra expanded its nuclear facilities from one to four, becoming the second-largest provider of nuclear power in the country. Last quarter, nuclear power accounted for 26% of the company's energy production.
Thanks to more favorable weather dynamic, Vistra reported strong earnings in its first quarter of the year, with adjusted earnings per share of $1.15 beating expectations by a large $0.37 margin. Management also reiterated its adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) guidance for the year of $5.5 billion to $6.1 billion, with 2026 guidance of greater than $6 billion.
About a week after Q1 earnings, Vistra also announced another acquisition, this time in the form of natural gas, when it acquired 2.6 GW of natural gas capacity from Lotus Infrastructure Partners, for $1.9 billion.
Natural gas is Vistra's largest source of power generation, at 54% last quarter, and this acquisition will add to that. With natural gas and nuclear seemingly the big winners from renewed electricity demand because of AI, Vistra seems very well-positioned.
Image source: Getty Images.
Vistra is still reasonably priced as long as AI demand holds up
Vistra's management has projected free cash flow of $3.0 to $3.6 billion this year before growth investments against a current market cap of $66 billion, making Vistra trade around 20 times free cash flow.
That actually appears a reasonable valuation if Vistra can continue growing steadily and landing more deals with artificial intelligence data centers in the years ahead. However, if regulatory hurdles pop up or AI scaling stalls for any reason, the company could quickly lose its AI premium.
