Power demand is expected to surge over the next decade driven primarily by artificial intelligence and data centers, with natural gas , renewable and utility stocks poised to benefit, according to Goldman Sachs. Natural gas will power 60% of the growth, while renewables are expected to make up the other 40%, according to the investment bank. Goldman recommends that investors buy call options for stocks most levered to the coming power demand surge.
Pipeline operator Kinder Morgan , natural gas producer EQT , solar panel manufacturer First Solar , and the power companies Sempra and Southern Company are particularly attractive for at-the-money call options, according to the investment bank. These buy-rated stocks are attractive because their current volatility is well below their median implied volatility, according to Goldman. The investment bank has stock price targets that imply upside of 8% upside for Kinder Morgan, 5.6% for EQT, 16.