Company Overview
Energy Transfer operates one of the largest midstream energy networks in North America, with over 130,000 miles of pipeline and associated energy infrastructure spanning 44 states. The Dallas-based energy giant made a significant strategic breakthrough in February 2025 when it announced its first-ever natural gas supply agreement with a data center operator – a landmark deal that signals ET’s entry into the red-hot AI infrastructure market.
The February CloudBurst Data Centers partnership was a game-changer: a long-term deal to supply natural gas for a massive 1.2-gigawatt AI-focused data center in Central Texas. ET’s Oasis Pipeline will provide up to 450,000 MMBtu per day of natural gas – enough to power a facility larger than many small cities. Most importantly, CloudBurst executives stated they will “work closely with Energy Transfer to identify additional potential data center sites” using ET’s pipeline network, suggesting this could be the first of many such deals.
Key Technical and Fundamental Drivers
AI Data Center Pioneer → First-Mover Advantage ET’s February 2025 CloudBurst partnership marked its entry into AI infrastructure, with potential to supply 1.2GW of power generation for at least 10 years starting in Q3 2026.
Pipeline to Growth → Expanding Data Center Business CloudBurst committed to working with ET to identify additional data center sites along their pipeline network, indicating this is just the beginning of a new revenue stream.
Strong 2024 Performance → Momentum Building Latest results showed transported natural gas volumes increased to over 17,000 BBtud, with management raising 2025 EBITDA guidance to $16.1-16.5 billion.
Analyst Confidence → 28% Upside Target 12 analysts maintain a “Buy” rating with average price targets around $22.50, suggesting significant upside from current levels near $17.53.
Market Positioning → AI Infrastructure Play With data centers requiring massive, reliable energy solutions and ET’s extensive pipeline network, the company is uniquely positioned to capitalize on AI infrastructure buildout.
Market Takeaway
Energy Transfer’s entry into the AI data center market earlier this year could be the catalyst that transforms how investors view this stock. The CloudBurst deal isn’t just a one-off contract – it’s validation of ET’s strategic positioning to capitalize on the massive power demands driving AI infrastructure development. With the first facility expected online in Q3 2026 and CloudBurst planning to expand their partnership with ET, this new revenue stream is still in its early innings.
The timing couldn’t be better as traditional power grids struggle to meet AI’s massive energy demands, while Energy Transfer can provide direct, behind-the-meter natural gas supply. Traders should watch for additional data center announcements, as management has indicated active discussions with other operators. With the stock still trading well below analyst targets despite this emerging business line, ET could be positioned for significant re-rating as the market recognizes the full potential of powering the AI revolution.