How Energy Transfer’s 2026 Gas Build-Out and AI-Linked Demand Strategy Will Impact Energy Transfer (ET) Investors

• In recent months, Energy Transfer LP outlined plans to invest about US$5.0 billion to US$5.5 billion in 2026 growth capital, largely to expand its natural gas network, including upsizing the Desert Southwest Transwestern pipeline to support rising demand from utilities, data centers, and potential coal-to-gas power plant conversions.
• This build-out, backed by long-term contracts and interest from income-focused investors, underscores how Energy Transfer is trying to turn emerging AI-driven and power-generation gas demand into more stable, fee-based cash flows.
• We will now examine how this enlarged Desert Southwest expansion and natural gas focus could influence Energy Transfer’s existing investment narrative.

Find companies with promising cash flow potential yet trading below their fair value.

Energy Transfer Investment Narrative Recap

To own Energy Transfer, you need to believe in long-lived demand for U.S. natural gas infrastructure and the partnership’s ability to turn that demand into stable, fee-based cash flows. The latest Desert Southwest expansion and 2026 growth-capex outlook support this narrative, but they do not materially change the near term focus on distribution coverage and leverage as the key catalyst, nor do they remove the execution and permitting risks tied to Energy Transfer’s growing list of multi-billion-dollar projects.

The Desert Southwest Transwestern expansion, now sized up to 2.3 billion cubic feet per day with a larger-diameter mainline, is the announcement that most clearly ties this news to Energy Transfer’s catalysts. It links directly to management’s emphasis on natural gas as a backbone for data centers and coal-to-gas power shifts, while also highlighting the same project execution, cost overrun, and regulatory timing risks that already sit at the center of the investment debate.

Yet despite the appeal of long-term gas demand and higher distributions, investors still need to weigh the growing execution and regulatory risk around Energy Transfer’s largest projects...

Read the full narrative on Energy Transfer (it's free!)

Energy Transfer's narrative projects $99.8 billion revenue and $6.7 billion earnings by 2028.

Uncover how Energy Transfer's forecasts yield a $21.62 fair value, a 33% upside to its current price.

Exploring Other Perspectives

Twenty two members of the Simply Wall St Community see Energy Transfer’s fair value between US$15.48 and about US$40.09, with several estimates well above today’s price. When you set those views against the scale and timing risk of multi billion dollar projects like the Desert Southwest expansion, it becomes clear why it can pay to examine different assumptions about the partnership’s future performance.

Explore 22 other fair value estimates on Energy Transfer - why the stock might be worth over 2x more than the current price!

Build Your Own Energy Transfer Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Energy Transfer research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Energy Transfer research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Energy Transfer's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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