Goldman Sachs Sees Value in Gas Stocks Amid Data Center Demand Surge

Jefferies reduced its price target for Kinder Morgan (KMI) to $33 from $35, citing project timing concerns, while maintaining a Hold rating. The stock trades at $31.31. KMI reported strong Q2 results, beating earnings and revenue estimates, and raised its 2026 guidance. The company's dividend yield is 3.87%, and it has raised dividends for 8 consecutive years.

The Williams Companies (WMB) lost a key water-quality certification for its $1B NESE project after a federal appeals court ruling. The company expects no impact on construction or its Q4 2027 in-service timeline. The project aims to expand gas supply to high-demand areas in New York.

Stifel highlights U.S. midstream energy sector's growth potential, citing disciplined capital allocation and rising power demand. Targa Resources (TRGP) and Williams Companies (WMB) are noted for strong performance, with TRGP reporting $1.603B Q2 2026 adjusted EBITDA and WMB exceeding revenue expectations and raising full-year guidance. Both companies saw price target increases from analysts.

Oil and gas companies are expanding into power generation through behind-the-meter (BTM) projects, partnering with hyperscalers like Microsoft. Chevron, Williams, and EQT are involved in significant BTM initiatives, with Chevron's Project Kilby targeting 2.67 GW capacity. Williams reported Q2 earnings growth, partly due to its power projects, while EQT is monetizing gas into power-linked contracts. Analysts project substantial data-center load growth, driving demand for BTM solutions.

A federal court overturned New Jersey's approval of Williams' $1B Northeast Supply Enhancement gas pipeline project, citing inadequate environmental safeguards. The project, targeting Q4 2027 completion, aims to add 400,000 dekatherms/day capacity. Williams plans to address the court's concerns, while environmental groups praise the decision. The court noted unresolved compliance measures and technical issues in the state's certification.

Oil prices surged due to Middle East tensions, with Brent crude at $101.21. The U.S. Energy Information Administration and Goldman Sachs revised forecasts, citing delivery risks. Enbridge (ENB) acquired Tallgrass Energy's crude oil business for $2.55B. Williams (WMB) completed a $5.5B acquisition of Momentum Midstream. Diversified Energy (DEC) agreed to buy Birch Permian for $1.8B. Tamarack Valley (TVE) and Headwater (HWX) merged in a $10B deal, focusing on existing assets.