The Williams Companies, Inc. WMB has announced plans to invest about $3.1 billion in two power projects designed to support the surging energy needs of U.S. data centers. With this move, the total capital dedicated to “power innovation” initiatives now reaches $5 billion. The projects underscore the company’s strategy to align with the exponential rise in demand for electricity fueled by artificial intelligence technologies.
Williams recently diversified into “power innovation projects,” with projects like Socrates in hand and upcoming behind-the-meter facilities targeting data centers and AI-driven demand. These projects will provide exposure to the surging digital economy while leveraging existing pipeline infrastructure. With potential gigawatt-scale projects targeted for 2027 and beyond, WMB is positioning itself at the intersection of energy and technology, creating additional high-return growth avenues beyond traditional midstream operations.
The fixed-price projects are agreed upon for a period of 10 years, with an option to extend them for a further few years by the customer. Williams' business model is largely fee-based, with about 90% of its EBITDA derived from fixed contracts, which insulates it from commodity price swings.
Meeting Soaring Data Center Energy Needs
The world is witnessing a gradual increase in the widespread adoption of artificial intelligence (AI) across all businesses, driving a significant increase in demand for data centers. These data centers house sophisticated servers and supporting infrastructures required by AI to process data and train models. To support this immense computing power and intense workload, data centers are in increasing need of more electricity.
According to the U.S. Energy Information Administration, power consumption in the United States is projected to hit record highs in 2025 and 2026. The rapid expansion of data centers, central to AI and digital transformation, is driving this unprecedented demand. Midstream companies, like WMB, are well-positioned to gain from the growing clean energy demand from data centers. This is because, employing their pipeline networks, the companies can transport natural gas to gas-fired power plants, which in turn provide electricity to the data centers.
Utilities nationwide are ramping up investments in grid upgrades and related infrastructure, and Williams’ initiative reflects a proactive step in this broader trend.
WMB’s 2025 Outlook & Spending Plans
To fund these projects, Williams has raised its 2025 capital spending plan by $875 million, setting a range between $3.45 billion and $3.75 billion. While the company has not yet disclosed the specific project locations, it expects the transaction to close in the first half of 2027. The move positions Williams to play a key role in ensuring a reliable power supply for the fast-growing digital economy.
WMB’s Zacks Rank & Key Picks
Oklahoma-based Williams is a premier energy infrastructure provider in North America. Currently, WMB has a Zacks Rank #3 (Hold).
Investors interested in the energy sector may consider some better-ranked stocks like California Resources Corporation CRC,Core Laboratories Inc. CLB and Oceaneering International, Inc. OII. While California Resources sports a Zacks Rank #1 (Strong Buy) at present, Core Laboratories and Oceaneering International carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
California Resources is an oil and natural gas exploration and production company, operating primarily in California. The Zacks Consensus Estimate for CRC’s 2025 earnings indicates 11.8% year-over-year growth.
Houston, Texas-based Core Laboratories is an oilfield services company that provides reservoir management and production enhancement services to the oil and gas companies. The Zacks Consensus Estimate for CLB’s 2026 earnings indicates 9% year-over-year growth.
Oceaneering International is one of the leading suppliers of offshore equipment and technology solutions to the energy industry. The Zacks Consensus Estimate for OII’s 2025 earnings indicates 57.9% year-over-year growth.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
