CenterPoint Energy Stock Just Hit an All-Time High. Here Are 4 Tailwinds Boosting the Stock.

CenterPoint Energy (NYSE: CNP) stock recently reached an all-time high of over $44 per share, and the Houston-based utility holding company is benefiting from a convergence of tailwinds that's propelling it upward. The stock has risen 24% in the past year, which is a terrific run for a regulated utility company.

There are four main drivers behind why the CenterPoint stock has taken off and could continue to see substantial growth going forward. CenterPoint is one of the most compelling infrastructure plays available.

AI and data centers in Texas

The single biggest reason energy stocks like CenterPoint are seeing explosive demand and growth is because of the electricity needs of AI and AI-related infrastructure. CenterPoint has reported an incredible 700% increase in data center interconnection requests in Texas alone. Furthermore, approximately two-thirds of new load growth in the Houston area is from data centers.

The acceleration in demand is staggering, and CenterPoint expects 10 gigawatts of new electric demand by the end of 2029.

Houston is a boom town

Houston's population is growing, and it is growing fast. From 2010 through 2023, Houston added approximately 1.5 million new residents. It is the second-fastest-growing metropolitan area in the country, behind only Dallas-Fort Worth. The population increase, paired with diverse economic growth in oil and energy, manufacturing, life sciences, exports, and technology, is contributing to demand for CenterPoint's electricity.

Massive investment in capital expenditures

CenterPoint is ready to spend a lot of money. The company plans to deploy $65 billion over the next decade to spur further growth. In addition, the utility company also identified more than $10 billion in incremental investment opportunities. According to CenterPoint, planned capital expenditures and investments will drive earnings-per-share growth of 7% to 9% through 2035.

Grid modernization

CenterPoint is a founding partner in Chain Reaction, which is an AI-driven grid reliability initiative. Nvidia and Palantir are also heavily involved. The initiative's mission is to ensure Houston's power grid is more resilient, particularly as demand escalates. CenterPoint stands to benefit by being directly involved in the modernization and expansion of the power grid as it collaborates with AI companies that are building out data centers for their AI needs.

Is CenterPoint still a buy?

CenterPoint's recent all-time high isn't momentum purely built on hype or hope. The company has substantial long-term earnings potential and real demand. Priced at $44 per share, the company's valuation is also on the rise. The forward P/E ratio for CenterPoint is above 23 now. The stock might seem expensive, but for long-term investors, we're still in the early stages of this new chapter for high-growth utility companies.

Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.