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Just For You
Why This Midwest Utility Is the Hottest Stock on Wall Street Right NowAuthored by Chris Markoch. Posted: 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 principle behind the recent surge in NiSource (NYSE: NI) stock. NiSource, a regulated utility, has suddenly become a favorite of analysts. In fact, despite the stock being up roughly 15% in 2026, KeyCorp recently raised its price target for NI. But is that a ceiling or a floor? On the surface, NiSource is a typical regulated utility delivering natural gas and electricity to residential, commercial and industrial customers. What’s made it more interesting to investors is the data center buildout moving into the nation’s heartland. NiSource Proves Why Location MattersThe bull case for NI isn’t new, but it’s worth explaining. Hyperscalers require dedicated data centers to host the servers and equipment that power their artificial intelligence (AI) efforts. That demand is not automatic — it depends on reliable, continuous energy.
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AI is energy-intensive, so data centers need ample 24/7 power. This demand is running into supply constraints on an aging electrical grid that requires upgrades for many applications beyond data centers. That’s why nuclear generation is back in the conversation, but new nuclear capacity takes years to come online. In the interim, natural gas fills the gap. Natural gas has become the preferred fuel for hyperscalers, and NiSource could play an important role. One of NiSource’s core operating regions is the Midwest, which is becoming strategically attractive for data centers for three main reasons:
Cheaper land Lower power costs Available grid capacity KeyCorp highlighted that NiSource’s jurisdictions generally offer constructive regulatory environments, including a relatively modest regulatory lag. That provides greater cost certainty for customers and helps NiSource produce stable, predictable earnings. Is NI Priced for Perfection?NI is up about 16% year-to-date in 2026, pushing its price-to-earnings ratio above 24x. That’s a premium to the broader market and its sector, though not an extreme one. Still, investors should ask whether recent gains have already priced in much of the upside. The stock has trended higher since bottoming near $38 last spring, forming a consistent series of higher lows that suggests accumulation rather than speculation. The 50-day moving average, around $46, has acted as a reliable floor during several pullbacks, including a sharp but brief dip in early March that was quickly bought.  The stock closed on April 9 at $48.47, comfortably above that moving average — a constructive sign. Momentum is a potential concern: the 14-day RSI has climbed into the mid-60s, approaching overbought territory, while a signal line at 53 confirms the broader uptrend. The gap between the two suggests the stock may need to digest recent gains before heading higher. Volume has been steady rather than climactic, which is modestly reassuring for bulls. Overall, the chart indicates 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 remains intact. Why Utilities Like NiSource Are Gaining Investor AttentionA roughly 16% year-to-date gain for a regulated utility is unusual, and momentum can reverse quickly. Utilities often attract defensive money, but that dynamic can flip when risk appetite returns. Valuation is a legitimate consideration, but context matters. Regulated utilities rarely trade at growth multiples unless the market sees a durable earnings catalyst. In NiSource’s case, the data center narrative could be that catalyst. If even a handful of hyperscaler agreements materialize in its key jurisdictions, the company’s earnings trajectory could justify a 24x multiple in retrospect. That said, much of the easy money may already be gone. Wall Street has noticed NiSource, and KeyCorp’s raised price target is unlikely to be the last upgrade. Upgrades can cluster near both peaks and inflection points, so investors who missed the initial move may be better off waiting for a pullback rather than chasing an extended utility stock. Bottom line: NiSource has earned attention. Its Midwest footprint, constructive regulatory environment and natural gas infrastructure put it squarely in the path of one of the most capital-intensive technology buildouts in recent history. Location really does matter — the key question is how much of that advantage the market has already priced in. |
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