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Special Report
Why This Midwest Utility Is the Hottest Stock on Wall Street Right NowAuthored by Chris Markoch. Originally Published: 4/13/2026. 
Key Points
- NiSource is benefiting from rising Midwest data center demand tied to AI infrastructure growth.
- Natural gas is emerging as a near-term solution for hyperscalers needing reliable 24/7 power.
- NI remains in a strong uptrend, but valuation and momentum suggest a pullback may offer a better entry.
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In real estate, the mantra is location, location, location. That’s the idea behind the recent surge in NiSource (NYSE: NI) stock. NiSource is a regulated utility that has suddenly become a favorite of analysts. In fact, despite the stock being up 15% in 2026, KeyCorp recently raised its price target for NI. But is that target setting a ceiling or a floor? At first glance, NiSource looks like a typical regulated utility delivering natural gas and electricity to residential, commercial, and industrial customers. The company has, however, found itself in greater demand as the data center buildout moves into the nation’s heartland. NiSource Proves Why Location MattersThe bull case for NI isn’t new, but it bears repeating. Hyperscalers need dedicated data centers to house the servers and related equipment that power their artificial intelligence (AI) ambitions. That isn’t as simple as “if you build it, they will come.”
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It comes down to energy. AI is a hungry beast, so data centers require ample 24/7 power to stay online. This demand is colliding with a supply challenge: an aging electrical grid that needs upgrades for many applications beyond data centers. That’s why nuclear energy is back in focus — but new reactors take years to build. In the nearer term, natural gas becomes a practical solution. Natural gas has become the preferred fuel for hyperscalers, and NiSource may play a key role. One of NiSource’s primary operating regions is the Midwest, which is becoming strategically important for data centers for three reasons:
Cheaper land Cheaper power Available grid capacity Why NiSource specifically? KeyCorp highlights that the company’s core jurisdictions feature constructive regulatory environments and relatively modest regulatory lag. That provides greater cost certainty and supports stable, predictable earnings for NiSource. Is NI Priced for Perfection?NI is up more than 16% in 2026, pushing its price-to-earnings ratio above 24x. That’s a premium to the broader market and its sector, but not an egregious one. Still, investors must consider whether the largest gains have already been priced in. Technically, NI has been in a steady uptrend since bottoming near $38 last spring, forming a series of higher lows that indicates accumulation rather than speculation. The 50-day moving average, currently near $46, has acted as a reliable floor through several pullbacks, including a sharp but brief dip in early March that was quickly bought.  The stock closed on April 9 at $48.47, well above that moving average — a constructive sign. The main concern is momentum: the 14-day RSI has climbed into the mid-60s, just below overbought territory. Its signal line at 53 confirms the broader uptrend is intact, but the gap between the two suggests the stock may need to digest recent gains before another leg higher. Volume has been relatively steady without the climactic surge that often signals a top, which is mildly encouraging for bulls. Taken together, the chart suggests NI is extended in the short term but not broken. A pullback toward the 50-day moving average near $46 would offer a more comfortable entry for investors who believe the data center thesis still has room to run. Why Utilities Like NiSource Are Gaining Investor AttentionA 16% year-to-date gain for a regulated utility is uncommon, and momentum can cut both ways. Utilities typically attract defensive capital, but that dynamic can reverse quickly when risk appetite returns. Valuation is an important consideration, but context matters. Regulated utilities rarely trade at growth multiples unless the market sees a visible, durable earnings catalyst. In NiSource’s case, the data center narrative provides that catalyst. If even a handful of hyperscaler agreements materialize in its key markets, the company’s earnings trajectory could make a 24x multiple look reasonable in hindsight. That said, much of the easy money may already be gone. Analysts have noticed the trend — KeyCorp’s raised price target is unlikely to be the last upgrade — but upgrades often cluster near peaks as much as at inflection points. Investors who missed the initial move would be wise to wait for a pullback rather than chase NI while it’s extended. The bottom line: NiSource has earned its moment. Its Midwest footprint, constructive regulatory backdrop, and natural gas infrastructure place it squarely in the path of one of the most capital-intensive buildouts in modern technology history. Location, as it turns out, really does matter — the question now is how much of that advantage the market has already priced in. |
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