SSE Stock And 2 Utility Names Riding AI Power Demand

AI data centers, rising utility rates, and stickier inflation are reshaping how investors think about electricity providers. Higher power demand tied to AI can support long term revenue potential for some utilities, while also feeding inflation pressures that affect interest rate expectations and the cost of capital. That mix creates both opportunities and risks for the Utility Sector Stocks screener. This article walks through 3 stocks exposed to these AI driven trends, all currently positioned as potential beneficiaries of rising electricity demand, so you can decide whether they fit or do not fit with your own portfolio approach.

SSE (LSE:SSE)

Overview: SSE is a UK based utility that generates electricity from wind, hydro, thermal plants and batteries, and also owns and operates electricity transmission and distribution networks that connect around 4 million customers in Great Britain and Ireland. It also supplies energy products and services and invests in new electricity infrastructure that supports the wider power system.

Operations: SSE generates most of its revenue from energy trading and optimisation through SSE Energy Markets (£7.5b), alongside sizeable contributions from SSE Thermal (£5.1b), Energy Customer Solutions (£4.9b), SSE Renewables (£1.6b), and its UK and Ireland networks businesses, with the bulk of revenue coming from the United Kingdom (£7.9b) and Ireland (£2.2b).

Market Cap: £29.3b

SSE gives you direct exposure to electricity demand from AI data centers while still anchored by regulated UK networks and long term contracted renewables. The current profile includes a relatively full P/E around the mid 20s and a balance sheet that relies heavily on external borrowing to fund large projects. The dividend yield is in the low single digits and not fully covered by free cash flow, so the investment case hinges on confidence in long term infrastructure returns, regulatory stability, and SSE’s ability to execute on large grid and generation projects as AI driven power needs evolve.

AI driven electricity demand could accelerate SSE’s infrastructure build, but the real story is whether its borrowing heavy balance sheet can support that growth. Get the SSE financial stress test in the SSE financial health report

Centrica (LSE:CNA)

Overview: Centrica is an integrated energy company behind British Gas and other brands, supplying gas and electricity to households and businesses across the UK, Ireland, Europe and North America. It also generates power, trades energy and develops low carbon infrastructure such as nuclear, solar, batteries and fuel cells.

Operations: Centrica generates most of its £22.5b in business revenue from Retail (£16.5b), with additional contributions from Optimisation (£6.1b) and Infrastructure (£2.0b). These figures are partly offset by inter segment and IFRS 9 related revenue adjustments.

Market Cap: £7.7b

Centrica offers exposure to electricity demand from AI heavy data centers while remaining anchored in regulated and low carbon infrastructure, including nuclear projects and new gas peaker plants in power constrained Ireland. Management is using AI to cut costs and improve customer service. At the same time, the group is loss making, carries funding risk through external borrowing and faces weather, regulatory and bad debt pressures in its core British Gas business. The stock is trading at a low P/S multiple and analysts expect a recovery in profitability and returns. A key issue for investors is whether Centrica can turn AI driven power demand and decarbonisation policy into durable earnings rather than another cycle of volatility.

Centrica’s AI era turnaround story hinges on whether today’s low P/S and infrastructure repositioning really point to a different future for earnings. Get the full context in the analysis report for Centrica

Meridian Energy (NZSE:MEL)

Overview: Meridian Energy is New Zealand’s largest electricity generator and retailer, producing renewable power from hydro, wind, battery storage and grid scale solar, and supplying residential, business, industrial and digital infrastructure customers in New Zealand, Australia and the UK under the Meridian Energy and Powershop brands.

Operations: Meridian Energy generates most of its revenue from NZ Retail at NZ$1.6b and NZ Wholesale at NZ$4.2b, partly offset by NZ$1.6b of inter segment eliminations and NZ$33m from other and unallocated activities.

Market Cap: NZ$15.0b

Meridian Energy sits at the intersection of growing electricity demand from electrification and AI enabled data centers and a fully renewable generation fleet, which is a rare combination in global utilities. The stock trades well below a DCF based fair value estimate, yet still looks expensive on P/S and remains loss making. The investment case hinges on whether forecast earnings growth and planned projects like the Bunnythorpe solar and storage development can close the profitability gap. Rising network and transmission charges, highlighted by management’s comments on Commerce Commission decisions, also threaten to squeeze customers. For investors, the key question is whether Meridian’s clean portfolio and pipeline can offset these inflation and funding pressures and support a sustainable return profile over time.

Meridian Energy’s fully renewable fleet and AI linked demand story look compelling, but the real tension is whether earnings can catch up. Get the full context in the analyst forecasts for Meridian Energy

The 3 utility stocks covered here are only a starting point. The full Utility Sector Stocks screener surfaces 7 more companies that pair solid balance sheets with equally compelling electricity demand and infrastructure stories. Use Simply Wall St to identify and analyze the specific catalysts and narratives that matter most to you, so you can focus on the highest conviction ideas rather than sorting through every utility stock yourself.

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Seeking Fresh Alternatives Before They Fly?

New ideas move fast and early signals fade. Spot screened stocks showing potential breakout characteristics while they are still under the radar for now, then act based on your own research and judgment.

• Review hand picked high yield companies in the 3 dividend fortresses and evaluate whether their income profiles fit your objectives before their payouts and pricing are widely recognized.
• Look for quality at a discount with curated businesses in the 10 high quality undervalued stocks while they may still be showing signs of strength that are not fully reflected in current pricing.
• Consider the infrastructure theme by scanning focused power grid enablers in the 34 power grid technology and infrastructure stocks before more investors focus on the same area.

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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