AI Is Eating Electricity. This Boring Utility Just Reported Its Best Quarter in Years Because of It.

While the rest of the stock market was frantic over tariff and AI disruption fears, one company quietly reported earnings that told the other side of the AI story. Dominion Energy, a Virginia-based utility you've probably never thought about, posted its strongest quarterly results in years, driven largely by the insatiable electricity demand of AI data centers.

Revenue came in at $4.09 billion in Q4 2025, up 20% year-over-year. Net income jumped to $567 million from just $59 million in the same quarter a year ago. The company beat analyst estimates and guided for 5% to 7% annual earnings growth through 2030.

For a utility, historically one of the most boring, stable, slow-growing industries in the entire stock market, those are remarkable numbers. So what's driving it?

Northern Virginia Is a Hub of the AI Data Center Universe

Dominion Energy serves about 3.6 million homes and businesses across Virginia, North Carolina, and South Carolina. But its crown jewel is the Virginia territory, and specifically, Loudoun County. If you've never heard of Loudoun County, you should know: it is home to more data center square footage than any other place on earth and has the nickname “Data Center Alley". A significant percentage internet traffic in the United States passes through Northern Virginia's data center corridor at some point.

And data centers are electricity-hungry in ways that are hard to overstate. A single large hyperscale data center can consume as much electricity as a small city. As companies like Microsoft, Amazon, Google, and Meta have raced to build out AI infrastructure to train models, run inference, and store data, their electricity consumption has exploded. Dominion one the utility providers benefits most from the expansion.

The company said weather-normalized electricity sales in its Virginia territory grew 5.4% in 2025, and all 20 of the top peak demand days in the Dominion Zone have occurred within the last 14 months. It now has over 48 gigawatts of contracted data center load in its pipeline, which is up from 47 gigawatts just last quarter. To put that in perspective: 48 gigawatts is roughly the total generating capacity of the entire state of California.

The Offshore Wind Project: Progress and Complexity

Alongside its data center growth story, Dominion is building one of the largest offshore wind projects in the United States: the Coastal Virginia Offshore Wind (CVOW) project, located off Virginia Beach. The project is now over 70% complete, with the company targeting first power to the grid by March 2026.

The project has a total budget of $11.5 billion, with $155 million in unused contingency remaining. That's a meaningful buffer, but investors have been watching costs closely. Offshore wind construction is notoriously complex and expensive and has burned other utilities badly. Several large projects on the East Coast were cancelled or significantly restructured after costs spiraled. Dominion has so far held to its timeline and budget, though the Q4 results included $258 million in charges tied to unrecoverable costs, a reminder that large infrastructure projects always carry execution risk.

Once complete, CVOW will generate enough electricity to power 660,000 homes. It also has a 50% ownership partner (Stonepeak Infrastructure Partners), which helped fund the construction but means Dominion doesn't capture all the upside alone.

What This Means for Investors

Utility stocks have historically been purchased for one reason: reliable dividends. Dominion currently pays a quarterly dividend of $0.67 per share, adding up to about $2.68 annually, providing a yield of roughly 4.1% at current prices. The ex-dividend date is February 27th, just days away, meaning investors who buy the stock before then are entitled to the next dividend payment.

What makes Dominion's current situation more interesting than the typical utility is that growth is accelerating at an incredibly pace. The data center pipeline isn't slowing down. If anything, AI capital expenditure is still ramping. Microsoft, Amazon, Google, and Meta have announced a combined ~$600 billion in AI infrastructure spending for 2026, much of it requiring new or expanded data center capacity. That electricity has to come from somewhere.

On the valuation side, Dominion trades at about 21.6 times earnings, slightly below the average for its utility peers (23.2x) and below what analysts consider a fair multiple (24.2x). That relative undervaluation, combined with the data center growth tailwind, is why some analysts see the stock as attractively priced even after its 11% gain over the past year.

The risks are real: the CVOW project could still encounter cost overruns; rising interest rates increase borrowing costs for capital-intensive utilities; and regulatory decisions on rate recovery (a South Carolina rate case decision is expected in June) could affect profitability. But the core thesis is a genuinely durable one: AI needs electricity, data centers need utilities, Dominion owns the most strategically located territory for data center development in the country.

The Bigger Picture: AI's Physical Infrastructure

Most of the conversation about AI investing focuses on software companies, chip makers, and cloud platforms. But AI has a physical layer that often gets overlooked: the power plants, transmission lines, cooling systems, and real estate that make it all run. Dominion Energy is one of the infrastructure companies benefiting from the AI race.

It's a reminder that major technological shifts always create unexpected winners. The gold rush famously enriched the people who sold shovels, not just the miners.

Sources: Dominion Energy Investor Relations, Bloomberg, Reuters, Yahoo Finance, CNBC