DC/Texas Conference Reinforces the Reliability Investment Theme

Overview

This report summarizes Goldman Sachs' conference feedback on the Power & Resources Reliability theme from meetings with 15 companies and industry organizations in Washington DC, Houston, and Dallas on May 11-13, 2026. The core conclusion is that the reliability investment cycle remains attractive, driven by AI expansion, accelerating electricity demand, geopolitical disruptions, supply-chain redundancy, extreme weather, and aging infrastructure. Conference feedback indicates that clients continue to place a very high priority on reliability for power, water, supply chains, networks, and labor, and in most scenarios that priority is slightly above affordability.

Core views

The report argues that the reliability supercycle is still supported by two main drivers: first, data center power demand, compute demand, and token demand from AI expansion; and second, redundancy buildout around the world to reduce interruption risk. US and European electricity demand growth is expected to return to levels rarely seen since the 1990s, and the report notes that US power demand CAGR through 2030 is roughly 3.2%. Infrastructure contractors are one of the most favorable areas because new project demand is strong, contract terms are more favorable, and project margins are better than legacy projects. Nuclear and natural gas participants are seeing long-term demand from hyperscalers, and natural-gas pipelines and LNG-related infrastructure are also benefiting from energy-security and power-reliability needs. At the same time, new technologies such as SMRs still face risks around first project execution, customer contracting, cash flow, and financing timing.

Analysis framework

The report combines conference-note analysis with a thematic-investment framework: it first validates customer demand, orders, project execution, regulation, and supply-chain conditions through discussions with company management teams and industry organizations, then maps the feedback into five interruption-risk categories under the reliability theme: power, water, supply chains, networks, and labor. The report also incorporates the AI innovation cycle, hyperscaler capex, US power demand, global data-center electricity use, company order backlogs, and valuation methods to judge the stage of the theme and the benefit to related assets.

Methodology notes

• Thematic investing frameworkReliability supercycle

  By assessing interruption risks in power, water, labor, networks, and supply chains, the framework identifies industries and companies that benefit from redundancy buildout and infrastructure upgrades.

  The framework argues that when companies, governments, and households worry about disruptions to critical systems, they increase capex to raise redundancy, which benefits power, pipelines, water utilities, engineering and construction, critical materials, automation, and cybersecurity.

• Innovation cycle assessmentAI Appraisal / Execution Phase

  A stage assessment for AI investment as it moves from theme-driven valuation expansion toward execution validation, explaining the market's shifting focus on company differentiation, competitive positioning, and capital returns.

  The report believes AI is still in the Appraisal or Hopes & Dreams phase, characterized by theme-driven momentum and multiple expansion; however, investor questions are increasingly focused on product differentiation, competitive position, and capital returns, showing the market gradually maturing toward the Execution Phase.

• Valuation methodologyDCF, EV/Sales, EV/EBITDA, FCF Yield

  Different covered companies use different valuation methods and target multiples to support ratings and target prices.

  For example, SMR's target price is based 50% on DCF and 50% on EV/Sales; VST uses EV/EBITDA and FCF yield; CVX uses EV/DACF, P/E, and free cash flow yield; KMI uses 2027 EBITDA multiples.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• CENTRUS ENERGY CORP (LEU)

  Uranium enrichment and HALEU supply-chain beneficiary

  Strengths

  LEU and HALEU customer demand is strong, with $2.4 billion in contingent LEU sales commitments and a $3.9 billion total order book; management says it is the only licensed HALEU facility in the Western world and, through a partnership with Palantir, has identified about $300 million in potential cost savings.

  Weaknesses

  Over the next five years the company is moving from a capital-light brokerage model to a capital-intensive business, making timely construction and production the key success metric.

  Comparison

  Compared with most participants in the nuclear-fuel supply chain, the company has a scarce HALEU license, but it faces a higher degree of difficulty in building out a first-of-its-kind supply chain.

  Risks

  Execution risk, supply-chain buildout risk, and delays in the construction schedule and centrifuge startup timeline.

• NUSCALE POWER CORP (SMR)

  Small modular reactor theme beneficiary, but still in the validation stage

  Strengths

  It has an early-mover advantage with NRC standard design approval, and its reactor design uses more readily available LEU rather than HALEU; hyperscalers have shown clear interest in scalable, modular, repeatable power solutions.

  Weaknesses

  Customer contracting and final investment decisions are progressing more slowly than expected, and customers still have FOAK concerns before the first project is delivered.

  Comparison

  Fuel availability is better than in some designs that require HALEU, but commercialization timing, cost, and cash flow still need to be proven.

  Risks

  Execution risk, customer contracting risk, cash burn and financing needs, final module delivery costs, competition, and permitting risk.

• ARGAN INC (AGX)

  Infrastructure and power construction beneficiary

  Strengths

  The report identifies Argan as one of the infrastructure contractors benefiting from more favorable terms and improving project margins.

  Weaknesses

  Earnings realization depends on the progress of the new-project cycle and changes in the project mix.

  Comparison

  Like other E&C and energy services companies, new-project margins are described as better than legacy-project margins.

  Risks

  Project execution, cost overruns, supply-chain constraints, and labor shortages.

• BAKER HUGHES CO (BKR)

  Energy services and power infrastructure beneficiary

  Strengths

  The report says Baker Hughes has greater flexibility in negotiating terms on new projects and managing execution risk, and sees long-term opportunities in geothermal and behind-the-meter solutions.

  Weaknesses

  Margin improvement may show up gradually over the project lifecycle rather than immediately.

  Comparison

  Like Argan and Quanta, it benefits from the trend of better margins on new projects than on historical projects.

  Risks

  Project execution, swings in energy capex, supply-chain issues, and changes in customer investment timing.

• Vistra (VST)

  Beneficiary of power demand, nuclear assets, and ERCOT/PJM power-pricing themes

  Strengths

  The report maintains a Buy rating and a $209 target price, with positive views on PJM demand, accelerating ERCOT load growth, buybacks, and firmer front-end power prices; existing nuclear assets and potential data-center deals provide upside.

  Weaknesses

  Data-center load growth is affected by policy uncertainty and requires clearer curtailment terms and a defined regulatory framework.

  Comparison

  Among nuclear and gas-fired power assets, VST has direct exposure to hyperscaler demand and regional power prices.

  Risks

  Uncertainty in the PJM capacity auction, power prices below expectations, changes in the power-demand theme, cost and endorsement risk for new large nuclear reactors.

• Chevron (CVX)

  Beneficiary of natural-gas power supply, energy security, and large-scale power infrastructure

  Strengths

  The company uses its position as a major US natural-gas producer to provide dedicated generation for hyperscalers; low-cost Permian gas supply and its partnership with MSFT reduce commercial risk.

  Weaknesses

  Low-carbon projects require strong policy support, and there is currently no viable green premium.

  Comparison

  Compared with a pure power developer, CVX has oil-and-gas project management, water-management, and large-project execution capabilities that can translate into advantages in data-center power supply and cooling solutions.

  Risks

  Commodity prices, refining margins, operating execution, and insufficient policy support for low-carbon projects.

• Kinder Morgan (KMI)

  Beneficiary of natural-gas pipelines, LNG supply, and power reliability

  Strengths

  The report maintains a Buy rating and a $35 target price; the company transports about 40% of US natural gas, its five largest assets have about 90% utilization, it has about 700 Bcf of storage capacity, and it holds a pre-FID natural-gas transportation project backlog of more than $10 billion.

  Weaknesses

  Project-level disclosure is limited, and state-level permitting in the Northeast remains a major bottleneck.

  Comparison

  Compared with other midstream companies, KMI is seen as having underappreciated leverage to US natural-gas demand growth and LNG feedgas demand.

  Risks

  Natural-gas demand ramping more slowly than expected, recontracting pressure, unfavorable rate cases, lower-than-expected new-project returns, RNG execution, lower oil prices, high-multiple acquisitions, and balance-sheet overexpansion.

Key data

• Conference scope15 companies and industry organizationsMeeting locations included Washington DC, Houston, and Dallas, and the theme was Power & Resources Reliability.
• US power demand growthabout 3.2% CAGR to 2030The report says US and European power demand is accelerating to levels rarely seen since the 1990s.
• Reliability capex growthmore than $80 billion in annual capex growthThe report describes this as an estimate of the reliability supercycle's scale, based on continued tailwinds for public-company green capex even after US IRA incentives fade.
• Additional investment capacity availablemore than $1 trillionThe report estimates that industries still have more than $1 trillion of additional investment capacity, though an economic slowdown or deterioration in corporate returns would be a risk.
• Centrus Energy orders$2.4 billion in contingent LEU sales commitments; $3.9 billion total order bookThe contract runs through 2040, and management says LEU and HALEU demand remains strong.
• NuScale Power rating and target priceNeutral; $9 12-month target priceThe target price is based 50% on DCF and 50% on EV/Sales, with key risks including execution, customers, cash burn, financing, module costs, competition, and permitting.
• Vistra rating and target priceBuy; $209 12-month target priceThe target price is based on 10.5x EV/EBITDA and a 7.0% FCF yield, supported by PJM demand, ERCOT power prices, and buybacks.
• Chevron rating and target priceBuy; $216 12-month target priceThe company is using its natural-gas assets to provide dedicated power to hyperscalers and continues to focus on large-scale power infrastructure and lithium businesses.
• Kinder Morgan rating and target priceBuy; $35 12-month target priceThe company transports about 40% of US natural gas and disclosed a pre-FID natural-gas transportation project backlog of more than $10 billion.
• Kinder Morgan pipeline utilizationabout 90% on the five largest assets, versus 74% in 2016Management says the system is running close to full capacity on peak-demand days, increasing the value of natural-gas storage and pipeline redundancy.

Impact & implications

The investment implication is that the reliability theme may continue to support assets tied to power, natural gas, nuclear, uranium, engineering construction, water utilities, pipelines, automation, and critical materials. In the near term, data-center power demand and hyperscalers' pursuit of 'time-to-power' should increase demand for natural gas, nuclear, renewables, and behind-the-meter solutions; over the medium to long term, geopolitical disruptions, extreme weather, and aging infrastructure should push companies and governments to add more redundancy. The report especially favors infrastructure contractors that can convert strong demand into pricing power, better contract terms, and higher project margins.

Risks

• If AI's impact on the corporate competitive landscape becomes fully defined, it could reduce the urgency for aggressive corporate investment.
• A deterioration in hyperscaler returns, free cash flow, or balance sheets could weaken their ability to keep expanding capex.
• Slower or weaker economic growth would suppress the infrastructure and power-demand investment cycle.
• If the market believes redundancy buildout is already sufficient, marginal investment demand for the reliability theme could decline.
• Regulation and permitting are long-cycle constraints for natural-gas pipelines, transmission, and power projects, and state-level permitting in particular can slow projects.
• Long supply-chain lead times, especially for turbines, compression equipment, and pipe, could delay project execution.
• Affordability pressure could limit the ability of water, power, and natural-gas utilities to pass costs through to customers.
• SMR and large new nuclear projects face uncertainty around first-of-a-kind execution, cost overruns, customer offtake, government loans, and risk backstops.
• Commodity-price and refining-margin volatility can affect oil-and-gas company cash flow and investment capacity.
• Policy uncertainty could affect data-center load interconnection, renewable-energy orders, and the economics of low-carbon projects.

What to watch

• Whether hyperscalers continue to sign long-term contracts for nuclear, natural-gas, and behind-the-meter power supply.
• Whether AI compute and token demand continue to build, or whether efficiency gains reduce capex growth.
• How ERCOT SB6, the PJM connect-and-manage framework, and local data-center restriction policies are implemented.
• The pace at which KMI and other midstream companies move pre-FID natural-gas transportation projects into FID.
• Whether Centrus' centrifuge and uranium-enrichment facilities stay on schedule through 2029.
• Whether NuScale reaches final investment decisions with Tennessee Valley Authority, RoPower Romania, and other projects.
• Whether natural-gas, power, and water regulators allow enough cost pass-through to support aging-infrastructure replacement.
• Whether Middle East and other geopolitical disruptions continue to increase global demand for energy security and supply-chain redundancy.
• Whether infrastructure contractors' new-project margins remain above historical projects and continue to translate into revenue and margin upside.
• Whether utility-scale solar and domestic manufacturing orders remain resilient after US IRA incentives fade.