AES Corp . is positioned to steer the renewable vitality buildout to help demand from information facilities, with the corporate seen as a key associate to tech corporations scaling up synthetic intelligence, in keeping with Morgan Stanley. “AES stays properly positioned to serve information middle renewables demand, the place it nonetheless sees strong curiosity and upward stress to returns,” David Arcaro and a workforce of analysts informed purchasers in a Friday notice. Arcaro has a inventory worth goal of $25 for AES, which means almost 50% upside from Thursday’s shut of $16.94 per share. AES is seen as a key associate for the tech sector as a result of the corporate executes on time and funds, having by no means canceled a mission, the analyst wrote. It has a renewable pipeline of 66 gigawatts, the bulk within the U.S., with 75% positioned in information middle development areas. The case stays sturdy that load development from information facilities might be met largely from renewables and batteries, although gas-fired technology will even be wanted, Arcaro mentioned. AES has discovered that tech clients want vitality sources that don’t emit carbon dioxide emissions. “The corporate has no scarcity of buyer curiosity in renewables,” he mentioned. AES additionally has a powerful relationship with suppliers, Arcaro mentioned. The corporate has all of the wanted tools on website for 2024, most of 2025 and a part of 2026, he added. What’s extra, AES would not have a lot danger publicity to the result of the U.S. presidential election in November. Whereas a repeal of the Inflation Discount Act is unlikely, even when the legislation have been overturned, AES may cross larger prices to clients by way of larger energy settlement costs, leaving returns largely unchanged, the analyst mentioned. “Demand must also be protected to a point given the substantial AI demand and decarbonization commitments on this trade, making this buyer base comparatively much less worth delicate,” Arcaro mentioned.