2024-06-14 18:26:36 ET
Summary
- NextEra Energy is positioned to benefit from AI, electrification, and reshoring trends in the United States.
- Lower than expected fiscal 2027 EPS guidance led to a share price drop, but the long-term growth potential remains strong.
- NEE outlined its advantages and positioning in its annual investor conference presentation.
- The company's scale, experience, and technological capabilities make it a solid investment for long-term shareholders.
Investment Thesis
We might be coming upon a new era of power generation in the United States, driven by artificial intelligence ((AI)), electrification, and reshoring. I believe that AI will deliver winning businesses and stocks for years to come, but the winners will come in stages, NextEra Energy ( NEE ) appears to be positioned to be one of those winners. After catching a boost in share price from the early AI hype, some analysts have scaled back estimates of the company’s growth potential following its recent investor conference. It’s important to remember that not all companies will experience revenue inflection at the same point in time, but I believe that NEE will have its day in the sun. In May, UBS highlighted NEE and other stocks as ways to gain access to the generative AI trend. I agree with UBS, but think that the gains NEE will experience are going to be less accelerated but very long-lived.
On Tuesday, June 11th, 2024, NEE held its annual investor conference and released FY 2027 EPS guidance that did not meet consensus analyst's expectations , sending the stock down over 5% during trading. I think analysts were anticipating too much growth to be pulled forward in the first few years of the AI hype cycle. Now that the stock has been downgraded , it’s time to see whether this is warranted....
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For further details see:
NextEra Energy: On The Verge Of A New Era Of Growth