Key Points
The data center market is expected to rapidly expand.
Natural gas can help with meeting increasing power needs.
Energy Transfer is one of the companies best positioned to meet rising energy demand.
- 10 stocks we like better than Energy Transfer ›
Energy Transfer (NYSE: ET) is off to a strong start in 2026, with shares trading up 13%.
Because it is one of the largest midstream companies in North America, Energy Transfer stands to benefit from rising energy demand from data centers, a revenue catalyst that could send the stock price even higher.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
If that expanding demand starts turning into more revenue, Energy Transfer shares may not trade under $20 for long.
Image source: Getty Images.
Growing natural gas demand
There are various market projections and differing time frames regarding the size of the data center market. Grand View Research forecasts it will be a roughly $902 billionglobal marketby 2033, while Fortune Business Insights projects it will be around $699 billion by 2034.
The range isn't what's important to focus on; the key is that data center expansion is expected to rapidly pick up, which means so too will the energy needs involved with powering them. Currently, natural gas is the third-largest source of electricity for data centers globally, according to the International Energy Agency (IEA).
With 140,000 miles of pipeline and related infrastructure, Energy Transfer has what it needs to make plenty of natural gas deals, which it has been doing. In terms of name recognition, one of its biggest agreements is with Oracle, under which it supplies the cloud and software company with natural gas for three of its data centers.
It also has a 20-year agreement with Entergy Louisiana, a subsidiary of Entergy, in which it will fuel Entergy's power plants. "Entergy's power plants support critical projects like Meta Platforms' upcoming hyperscale AI data center in Richland Parish," the company said in a press release.
What to watch for next
Several projects could be up and running for Energy Transfer this year, so any updates on those will be something to watch for in its upcoming Q1 2026 earnings results, which are expected on May 5.
Looking at how to value the company, its forward price-to-earnings ratio of 11.3 seems fair, if not slightly undervalued, given data center expansion and natural gas demand. Energy Transfer also has a low beta, so it's less volatile than the broader market, and it offers a dividend that yields just under 7%.
A risk for Energy Transfer is that data center expansion doesn't happen as quickly as expected, which could lead to less natural gas demand from that newer revenue source. But if Energy Transfer can show continued momentum in its upcoming earnings report, the stock may not stay under $20 for long. It's a fair time to consider starting a position.
Should you buy stock in Energy Transfer right now?
Before you buy stock in Energy Transfer, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Energy Transfer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $580,872!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,219,180!*
Now, it’s worth noting Stock Advisor’s total average return is 1,017% — a market-crushing outperformance compared to 197% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of April 16, 2026.
Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Entergy, Meta Platforms, and Oracle. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
