Entergy (ETR): The Regulated Utility Powering the AI Grid

Hey there, bargain hunter. While most of Wall Street is chasing AI chip stocks and hyperscaler software plays, the boring regulated utility sitting beneath all of it has been quietly building something significant. Entergy Corporation (NYSE: ETR) does not get the headline treatment. But the numbers are starting to demand attention.

What Happened

Entergy closed out 2025 with adjusted EPS of $3.91, landing in the top half of its guidance range for the ninth consecutive year. Full-year operating cash flow reached $5.2 billion. Third-quarter revenue hit $3.81 billion, up 12.48% year-over-year. These are not the numbers of a sleepy utility grinding through rate cases.

The driver is straightforward: industrial sales grew 13% in 2025, fueled almost entirely by new data center customer agreements. The company operates as a fully regulated public utility across Arkansas, Louisiana, Mississippi, and Texas, serving roughly 3 million customers. That Gulf South footprint, which used to be viewed as a limitation, is now the asset. Affordable natural gas access, an established regulatory framework, and a relatively uncrowded transmission network have made Entergy’s territory one of the most sought-after landing zones for hyperscale compute buildouts in North America.

The Real Story Behind the Numbers

The deals landed here are not small. Entergy signed agreements to power a $10 billion Meta AI campus in Louisiana and a $4 billion Google facility in Arkansas. The Meta project alone could raise Louisiana’s statewide energy demand by approximately 30%. That is not a rounding error in a utility service territory.

Slight tangent, but it matters: regulators are actually playing along. The Louisiana Public Service Commission approved the generation and transmission resources needed for the Meta data center. Arkansas passed legislation creating a Strategic Investment Recovery Rider, allowing Entergy to recover costs for major grid and generation projects tied to economic development outside the traditional rate cap. Texas regulators approved the 754 MW Legend combined-cycle plant and the 453 MW Lone Star combustion turbine in late 2025. That is three states moving in roughly the same direction at roughly the same time, which is not something you see often.

The data center pipeline grew to 7–12 GW as of the Q3 2025 earnings call, up from 5–10 GW the prior quarter. The company also pre-ordered an additional 4.5 gigawatts of power island equipment to get ahead of long lead times. Management is clearly not waiting to see if demand materializes.

The Data That Counts

• 2025 adjusted EPS: $3.91 (top half of guidance; up from $3.65 in 2024)
• 2025 operating cash flow: $5.2 billion
• TTM revenue: approximately $12.9 billion
• TTM net income: approximately $1.8 billion
• 2026 adjusted EPS guidance: $4.25 to $4.45
• 2026 capital plan: $11.6 billion (up $3.6 billion from 2025)
• Projected adjusted EPS CAGR through 2029: greater than 8%
• Industrial sales growth in 2025: 13%
• Weather-adjusted retail sales expected growth in 2026: approximately 5%
• Nuclear production tax credits monetized in 2025: $550 million
• Nuclear PTCs planned for monetization in 2026: $215 million
• Data center pipeline: 7–12 GW under evaluation as of Q3 2025
• MISO-approved transmission capital projects (2024 MTEP): $1.7 billion

One number worth sitting with: the $11.6 billion 2026 capital plan. For context, that is up $3.6 billion in a single year. It reflects an $11.6 billion bet that the data center and industrial load growth in its territory is real, durable, and financeable. The company has roughly 45% of its 2026–2029 equity needs already contracted, which removes a meaningful amount of execution risk from the capital raise side.

Is It Cheap?

This is where it gets interesting. ETR is not cheap on a headline P/E basis. The stock trades around $110 as of early June 2026, near a P/E of roughly 28x on trailing earnings. The US Electric Utilities industry average sits around 21x. Closer peer averages range from 17x to 26x depending on how you define the peer group.

So you are paying a premium. The question is whether the premium is warranted. With projected greater-than-8% adjusted EPS CAGR through 2029, $11.6 billion in capital being deployed into rate-base-accretive projects, and a regulatory environment actively facilitating recovery mechanisms, the growth profile here is meaningfully above the utility sector average. The Meta project alone is estimated to add approximately $1 per share to Entergy’s EPS run-rate by 2030–2031.

The part people skip: data center customers under Entergy’s framework are covering their full cost of service and contributing to grid maintenance costs that would otherwise fall on residential customers. That is not just good optics. It structurally improves the quality of Entergy’s earnings base.

Bull / Base / Bear

• Bull: Data center pipeline converts at the high end of the 7–12 GW range. Regulatory approvals continue across all four states. Capital plan executes on time. EPS growth exceeds 8% CAGR through 2029. Multiple expansion follows earnings growth. ETR becomes a core infrastructure holding for institutional AI infrastructure allocators.
• Base: Pipeline converts at mid-range. Capital deployment runs roughly on schedule with minor regulatory friction. EPS hits the $4.25–$4.45 guidance band in 2026 and compounds steadily from there. Stock holds its current premium multiple. Total return roughly tracks earnings growth plus the dividend.
• Bear: One or more large data center projects face delays, downgrades, or contract termination. Capital cost overruns on gas plant construction eat into projected returns. Rate case outcomes in Louisiana or Arkansas disappoint. Multiple compresses toward the sector average of 21x, implying meaningful downside from current levels. Share count dilution from equity issuances is a slow but real drag – shares outstanding rose 4.3% in 2025 alone.

Action Plan

ETR is not a deep value play right now. You are paying a fair-to-full price for a utility with above-average growth visibility. For conservative allocators, a partial position at or below current levels, with a plan to add on any pullback toward the $95–$100 range, is a reasonable framework. That range would bring the forward multiple closer to 22–23x on 2026 guidance, which looks more comfortable for a regulated name carrying this much capital spend.

For more aggressive positioning: the 2029 earnings growth story, if it plays out, justifies holding through near-term multiple noise. The data center contracts include cost-of-service protections and termination provisions. This is not speculative load growth. These are signed agreements with some of the largest companies in the world.

Cheap Investor Scorecard

• Data center pipeline conversion rate vs. 7–12 GW guidance range: Watch quarterly
• 2026 capital plan execution: $11.6 billion deployed, on schedule?
• Regulatory approvals in Arkansas, Louisiana, Texas: Track each state docket
• Adjusted EPS vs. $4.25–$4.45 guidance band: Report each quarter
• Share dilution: Is the count growing faster than EPS?
• Industrial sales growth: Target approximately 10% in 2026
• Nuclear PTC monetization: $215 million planned for 2026
• Weather-adjusted retail sales: Target approximately 5% growth in 2026
• Gas plant construction timelines: Any delays on the 2.3 GW of new capacity
• Insider activity: Recent selling worth monitoring against the growth execution story

Bottom Line

If the data center load materializes as contracted and Entergy executes its $11.6 billion capital plan without major regulatory reversals, this is a utility with an earnings growth profile that most of its sector peers cannot touch right now. The premium multiple is defensible – not comfortable, but defensible.

If capital costs run hot, data center demand softens, or regulators in any of four states shift tone, the downside math gets ugly fast at a 28x multiple. That tension between a compelling growth story and a full valuation is exactly what makes ETR worth watching closely rather than buying blindly.

The grid upgrade cycle is real. The question is how much of it is already in the price.

– The Cheap Investor