Bernstein U.S. Electrical Equipment: State of Utility Capex 4Q25
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Bernstein's latest utility capex tracker reveals robust growth, with 4Q25 capex rising 12% year-over-year and 30% quarter-over-quarter, exceeding seasonal trends by 10 percentage points. Although full-year 2025 capex growth of 10% missed the earlier 16% consensus, it accelerated meaningfully from 4% in 2024. Consensus now expects 2026 capex growth of 21%, triple the industry's historical 8% trend, revised up 3 percentage points over the past three months.
Utilities added approximately $94 billion to multi-year capex plans this quarter, bringing the total to $1.15 trillion through 2030. Roughly 60% of incremental investment flows to generation, where multi-year plans grew 39%. Bernstein also introduced a large load pipeline tracker, identifying 447 gigawatts of cumulative capacity, primarily from data centers, representing 33% of current US generation capacity. Covered stocks like Quanta Services (PWR), Hubbell (HUBB), and Eaton (ETN) are positioned for accelerating organic growth.
However, Bernstein cautions that 2025's capex shortfall signals potential supercycle headwinds, including NIMBY opposition and political friction. The EIA and PJM recently lowered load growth forecasts, and CBRE noted the first decline in under-construction data center capacity across major markets. Bernstein rates ETN and HUBB as Outperform with targets of $428 and $553, respectively, while PWR carries a Market-Perform rating with a $515 target, reflecting maximum but balanced utility capex exposure.