(Reuters) -NextEra Energy beat Wall Street estimates for second-quarter adjusted profit on Wednesday, boosted by robust growth in its renewables division amid soaring power demand from AI data centers and hyperscalers.
But NextEra stock dropped 4% to $74.14 per share on concerns about the future of renewable energy tax credits.
In a research note, analysts at Jefferies said NextEra’s long-term profit growth faces resistance as power projects rely less on tax credits. U.S. President Donald Trump claims that rapid adoption of solar and wind power has made U.S. electricity unstable and expensive, justifying his bid to end most subsidies for renewable energy.
Power consumption in the U.S. is expected to reach record highs in 2025 and 2026, according to the U.S. Energy Information Administration. This surge is fueled by growing electricity needs from AI and cryptocurrency data centers, as well as increasing electrification of homes and businesses.
The S&P index tracking utilities rose 3.5% in the quarter ended June 30.
Florida Power & Light, the company’s regulated utility, reported net income of $1.28 billion, up 4% from a year earlier.
NextEra Energy Resources (NEER), the renewables arm, added about 3.2 gigawatts of new renewables and storage to its backlog during the quarter, including more than 1 gigawatt serving hyperscalers. The unit’s backlog now totals about 30 gigawatts.
NextEra, which operates solar, wind, natural gas, and nuclear energy centers, said in June that renewable energy is critical to meeting rapidly growing U.S. power demand, citing challenges in expanding natural gas capacity.
NEER reported net income of $983 million in the second-quarter, compared with $552 million a year ago.
The company, the largest electric utility holding company by market capitalization, reported operating revenue of $6.70 billion, missing analysts’ average estimate of $7.38 billion, according to data compiled by LSEG.
NextEra also said it expects to grow its dividends at a roughly 10% rate per year through at least 2026.
The Florida-based company earned $1.05 per share on an adjusted basis, compared with analysts’ average estimate of $1.01 per share, according to data compiled by LSEG.
Earlier this month, President Trump issued an executive order to eliminate any preferential treatment for building wind and solar generation projects on federal lands.
NextEra Chief Executive John Ketchum said most of the company’s renewable energy backlog has permits for developing projects on federal lands.
“Let’s just see how it’s actually applied in practice,” Ketchum said on a conference call with analysts in reference to the executive order.
(Reporting by Katha Kalia and Pooja Menon in Bengaluru and Tim McLaughlin in Boston; Editing by Tasim Zahid, Franklin Paul and Nick Zieminski)
