The price of natural gas currently sits at record levels amidst confidence the commodity will continue to drive strong demand from AI data centres.
On Tuesday, the vice president of Microsoft’s energy business, Bobby Hollis, said the titan was willing to use natural gas with carbon capture technology to power its artificial intelligence server farms.
Hollis’ remarks on a CNBC interview today bode well for natural gas investors as continued demand from AI companies could push natural gas prices further up in 2025.
Natural gas demand is rising fast
Natural gas remains an exciting investment proposition for this year as data centres globally are estimated to require up to 660 terawatt-hours (TWh) of power annually by 2035.
For reference, that translates to about 10% of the global demand for electricity at present.
“The market is screaming that we need more energy in this world,” said Toby Rice, chief executive of EQT, the largest pure-play producer of natural gas in the United States as he spoke with CNBC this week.
Rice sees further upside in natural gas prices as the world continues to shift from coal to natural gas for electric power generation.
Still, EQT stock is down some 10% versus its year-to-date high at writing.
EQT stock is outperforming the AI names
CEO Toby Rice expects continued focus on artificial intelligence to serve as a meaningful catalyst for natural gas prices for the long term.
In fact, the correlation is so pronounced that investors have started seeing EQT stock as an AI play.
“We welcome all investors who see the value of natural gas. Not just what the value of natural gas is today, but decades into the future,” he added in the CNBC interview on March 10th.
Investors should note that EQT shares, unlike the majority of tech stocks, are in the green at writing (year-to-date) despite a broader sell-off in AI stocks that has pushed the S&P 500 down some 10% over the past three weeks.
Plus, EQT stock pays a dividend yield of 1.28% as well.
Should you invest in EQT shares today?
EQT stock may be worth owning at current levels due to the strength of its financials as well.
In February, the energy company reported Q4 earnings that topped Street estimates.
EQT reported earnings of 69 cents per share on $1.82 billion in adjusted operating revenue for its recently concluded quarter, surpassing analysts’ estimates of 50 cents per share and $1.72 billion in revenue.
That’s part of the reason why Wall Street remains bullish on EQT shares.
Analysts currently rate the New York listed firm at “overweight”.
Their average price target on EQT currently sits at $55.56 which indicates potential upside of about 13% from current levels.
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