In recent years, plenty of investors have added more and more tech stocks to their portfolios in their efforts to profit from the artificial intelligence (AI) boom. But chipmakers, hyperscalers, and AI software purveyors aren't the only investment options for those looking to benefit from this trend. As big tech companies build out massive data centers, they need huge dedicated supplies of electricity to power them. Because of that, many electric utility stocks are well positioned to profit.
Dominion Energy (D -0.43%) ranks as one of the best electric utility stocks one can buy now, particularly if the AI infrastructure boom continues at its current torrid pace.
NYSE: D
Key Data Points
Dominion's core market includes "Data Center Alley"
According to the Virginia Economic Development Partnership, the state of Virginia is home to more than 35% of all known hyperscale data centers worldwide. And Dominion Energy helps power those data centers.
Northern Virginia's Loudoun County is known as "Data Center Alley," home to digital infrastructure that supports more than 3,500 technology companies. Arlington, Virginia, was also where the Department of Defense first developed ARPANET (the precursor to the modern internet) in the late 1960s. That gave the region a head start on building out the fiber networks that serve as the foundation of the internet today.
Its position as an electric utility serving a market that's already a data center capital could give Dominion Energy a competitive advantage from here -- and make it a good investment choice in the AI energy trade.
Image source: Getty Images.
Dominion Energy's business is driven by data centers
More than most electrical utilities, Dominion Energy has extensive experience working closely with tech companies. It knows how to build out power supplies to meet the fast timelines and unique requirements of AI data centers.
On the company's first-quarter 2025 earnings call, Dominion Energy CEO Robert Blue said of the company's hyperscaler customers:
They want to go fast. They always want to go fast. That's their business. It's always been their business. We've been effective at serving them, thus far. I don't see any reason why that's going to change in the future.
He also commented that the company is "seeing continued appetite for additional data center capacity in our service territory."
More recently, on the third-quarter earnings call in October, Dominion Energy executives said that the company was getting more than 25% of its sales from data centers in Virginia. "Our data center load just continues to grow, and the demand continues to grow," Blue commented, "which is something considering that we have connected 450 data centers already."
Solid earnings growth plus dividends
In the third quarter, Dominion Energy's operating earnings rose 10.2% year over year to $921 million. Its operating earnings per share (EPS) rose 8% to $1.06. Management is guiding for annualized operating EPS growth of 5% to 7% through 2029.
At the current share price, the stock's dividend yields 4.4%, which could make it particularly attractive to income-focused investors. And the shares might be undervalued: With a price-to-earnings ratio of 19.9, Dominion Energy is cheaper than the AI-heavy Nasdaq-100, with its P/E ratio of 34, or the S&P 500 index, with its P/E of 28.1.
