American Electric Power Company Inc. (NASDAQ:AEP) stock fell Wednesday despite the utility company reporting better-than-expected third-quarter 2026 results and unveiling a $100 billion capital investment plan to support surging electricity demand.
The company reported adjusted earnings of $2.23 per share, beating analysts’ consensus estimate of $2.05.
Revenue reached $6.832 billion, topping the consensus estimate of $6.546 billion.
Management attributed the strong performance to favorable regulatory outcomes, growing customer demand, ongoing transmission and generation projects, and disciplined execution.
Earnings Forecast and Long-Term Growth
American Electric Power expects full-year 2026 operating earnings to reach or exceed the upper end of its forecast range of $6.25 to $6.55 per share, compared with analysts’ expectations of $6.40.
The company introduced operating earnings forecasts of $6.75 to $7.05 per share for 2027 and $7.40 to $7.70 for 2028.
AEP also raised its annual operating earnings growth forecast for 2027 through 2031 to 9% to 11%, up from 7% to 9%.
Management expects operating earnings to grow at a compound annual rate of more than 10% through 2031 and approximately 10% through 2033.
The company is targeting annual total shareholder returns of 12% to 14% through 2031.
$100 Billion Investment Plan Targets Power Demand
CEO Bill Fehrman described surging electricity demand as a “once-in-a-generation growth opportunity,” saying the company is positioned to capitalize on the expansion.
AEP expects electricity demand across its service territory to more than triple by 2031, driven by data centers, manufacturing and other large-scale infrastructure projects.
The company unveiled a $100 billion capital investment plan for 2027 through 2031, focused on expanding generation and transmission capacity while improving grid reliability.
The company expects its rate base to grow from $87 billion in 2026 to $162 billion in 2031, representing annual growth of more than 13%.
Transmission investment is projected at $37 billion, with the transmission rate base expected to nearly double to approximately $70 billion.
Generation investment will reach $36 billion, including an additional $7 billion for regulated natural gas generation compared with the previous five-year plan.
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Data Centers Drive Electricity Demand
AEP expects electricity demand across its 11-state service territory to more than triple by 2031, fueled by data centers, manufacturing and other large-scale infrastructure projects.
Contracted incremental electricity load reached 84 gigawatts through 2031, up 15 gigawatts from the 69 gigawatts disclosed during the second-quarter earnings call.
Of that total, 35 gigawatts are backed by firm take-or-pay energy supply agreements. All 46 gigawatts of contracted load in ERCOT are backed by fully executed SB 6-compliant letters of agreement, according to management.
AEP estimates these agreements could provide up to $21 billion in fixed-cost offsets for existing residential customers over their lifetimes, up from its previous estimate of $16 billion.
Google, Amazon Projects Advance
AEP finalized commercial agreements for its Wyoming Fuel Cell Project and the 765-kilovolt Piketon transmission project in Ohio.
The Wyoming project is backed by a 20-year power purchase agreement with Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) subsidiary Google, with construction underway.
The Piketon project has a 20-year offtake agreement with SB Energy, which will fund the project. Construction is expected to begin in the first quarter of 2027.
Separately, AEP signed a development agreement with X-energy and Amazon.com Inc. (NASDAQ:AMZN) to evaluate a potential small modular nuclear reactor project in Indiana.
The earliest possible final investment decision is 2030, subject to financial and strategic requirements.
Cash Flow and Funding Strategy
AEP expects approximately $55 billion in operating cash flow over the five-year forecast period, covering more than half of its planned capital spending.
The company expanded its investment plan by $22 billion while increasing expected equity funding by $5.2 billion.
New growth equity is expected to finance 24% of incremental investment, including $2.5 billion in marketed equity offerings anticipated over the next two years.
AEP Price Action: American Electric Power shares were down 1.17% at $128.77 at the time of publication on Wednesday, according to Benzinga Pro data.
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