Vistra beats quarterly core profit estimates on AI-driven power demand

By Katha Kalia

Feb 26 (Reuters) - Power producer Vistra Corp VST.N on Thursday beat Wall Street expectations for fourth-quarter adjusted core profit, as an AI-driven surge in electricity demand from data centers fueled earnings.

U.S. power consumption is set to rise sharply this year and the next, driven by rapid growth in AI and cryptocurrency data centers and increased electrification of heating and transport.

Shares of the company were down 3.5% in afternoon trading, after it reported a 52.5% drop in quarterly net income due to higher interest expenses.

However, Vistra CEO Jim Burke maintained a bullish outlook on power demand and told analysts on a conference call that the company expects overall peak load growth to outpace peak demand.

Burke added that he does not expect data center-related load growth to have a meaningful impact on tightening supply–demand balances until late 2027 or early 2028.

Vistra is one of the prime beneficiaries of surging power demand, as Big Tech companies race to secure long-term electricity supply contracts to power AI-led operations.

The power producer has a deal to supply power to Amazon's AMZN.O Amazon Web Services from its Comanche Peak nuclear plant.

AWS would build a facility near the plant to utilize its 1,200 megawatts of capacity, while also bringing one-for-one backup generation to support future expansion and reliability.

Earlier this year, Meta Platforms signed a 20-year agreement to buy power from three of Vistra's nuclear plants in the U.S. heartland to build small modular reactors.

Vistra, in January, also announced a $4.7 billion agreement to acquire Cogentrix Energy and its 10 natural gas-fired plants from Quantum Capital Group to boost capacity for growing power needs.

"We believe the market fails to appreciate the value of contracted cash flows completed, before considering future deals," said analysts at J.P Morgan.

Vistra posted an adjusted earnings before interest, taxes, depreciation, and amortization of $1.74 billion for the fourth quarter, above analysts' average estimate of $1.68 billion, according to data compiled by LSEG.