Dec. 3 at 5:01 PM
Artificial intelligence is set to fuel a multi-year rise in European electricity demand beginning in 2026, creating opportunities for utility stocks. Morgan Stanley argues that Europe is still in the early stages of the AI-driven power boom seen earlier in the U.S., meaning valuations may offer room for upside. Data-center energy consumption is expected to soar from 73 TWh in 2025 to 295 TWh by 2035, representing about 8% of total demand, with the U.K., France, and Germany leading the growth.
Against this backdrop, Morgan Stanley highlights three potential winners: Centrica, RWE, and Engie. Analysts project total shareholder returns of roughly 13%-14% for Centrica, 15% for RWE, and 10% for Engie, backed by earnings growth, asset monetization opportunities, and dividend support. While Engie carries some political risk due to French instability, all three stand to benefit from accelerating power needs driven by Europe’s expanding AI and data-center infrastructure.
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