Key Stats for SoFi
- 52-Week Range: $16.18 – $20.96
- Street Mean Target: $24.39
- Market Cap: ~$72B
- Distribution Yield: ~6.5%
- NTM EV/EBITDA: 8.56x
- 2026 EBITDA Guidance: $18.8B – $19.1B
Analyze Energy Transfer’s distribution coverage and valuation on TIKR >>>
The AI Buildout Has a Natural Gas Problem. Energy Transfer Is the Solution.
Most of the conversation around artificial intelligence focuses on chips, data centers, and the companies building them. Less attention is paid to what actually powers those facilities once they are running.
AI data centers require enormous amounts of reliable, always-on electricity, and the power grid alone cannot keep up. The solution the industry keeps landing on is natural gas, and the company sitting on one of the largest natural gas pipeline networks in the United States is Energy Transfer (ET).
The thesis is straightforward. Hyperscalers and data center operators need a long-duration, guaranteed fuel supply to run on-site generation. Energy Transfer has the pipes, the scale, and the geographic reach to deliver it, and the company has been signing contracts to prove it.
Its Hugh Brinson Pipeline entered commercial service ahead of schedule in Q2 2026, delivering natural gas from the Permian Basin into Texas power markets.
The Desert Southwest Pipeline, a roughly 520-mile line backed by 25-year contracts and capable of carrying 2.3 billion cubic feet of gas per day toward Phoenix, is expected to be in service by late 2029. These are not speculative projects. They are fully contracted infrastructure assets being built to meet demand that already exists.
The EBITDA with Estimates chart shows what this growth pipeline translates into financially. EBITDA sat between $13 billion and $16 billion from 2021 through 2025, growing steadily but without a sharp inflection. Consensus now sees that figure jumping to around $19 billion in 2026 and continuing to expand past $21 billion by 2030.
Co-CEO Tom Long set the tone on the Q2 earnings call: “These results further strengthen our belief that the market fundamentally underappreciates the value of our business.”
Q2 adjusted EBITDA came in at $5.07 billion, up 31% year-over-year, and distributable cash flow attributable to partners hit $2.59 billion, up 32%.
Management responded by raising full-year 2026 EBITDA guidance to $18.8 billion to $19.1 billion, roughly $500 million above where it started the quarter.
See analysts’ growth forecasts and price targets for ET (It’s free) >>>
Why Free Cash Flow Looks Lower Than You Might Expect
Energy Transfer generated $8.3 billion in free cash flow in 2021, and the figure has run well below that in recent years, dropping to $3.8 billion in 2025. For a company with EBITDA growing steadily, that gap deserves an explanation.
The answer is capital investment. Energy Transfer is spending $5.6 billion to $5.9 billion on organic growth projects in 2026 alone, constructing the pipeline infrastructure that will underpin its next decade of fee-based earnings.
Free cash flow compresses during heavy build periods and then expands once those projects enter commercial service.
The structure of the business makes this manageable. Energy Transfer is a master limited partnership, or MLP, organized specifically to generate and distribute cash flows to unitholders rather than retain earnings in the traditional corporate sense.
Distributable cash flow, which accounts for maintenance but not growth capital, came in at $2.59 billion in Q2 alone.
The distribution has been raised for 19 consecutive quarters, and coverage is roughly 2.2 times the current payout, meaning the income stream is well protected even as the company invests aggressively in growth.
Find out why ET’s natural gas and AI data center demand story still matters >>>
What the Valuation Model Says About ET’s Return Potential
For income-oriented investors, the TIKR valuation model tells a story that is deliberately different from a growth stock scenario.
The mid-case assumes revenue growing around 6% annually with net income margins near 6%, producing a mid-case target of around $29.50 by the end of 2030, an annualized return of roughly 8% on price alone.
Layer the distribution yield on top of that, and the total return picture improves considerably. At the current annualized payout of $1.36 per unit, unitholders collect around 6.5% annually while waiting for appreciation.
The model’s mid-case total return of around 41% over 4.4 years reflects a business that compounds steadily rather than swings dramatically.
The Street’s mean target of around $24 implies roughly 15% upside from current levels, and with the unit sitting essentially at its 52-week high, the market appears to be taking the AI natural gas thesis more seriously than it did a year ago.
Should You Buy Energy Transfer Stock?
Energy Transfer is not a story that requires a leap of faith. The infrastructure is built, the contracts are signed, and the distribution has been raised nineteen quarters in a row.
The AI data center buildout adds a multi-year demand tailwind that plays directly into the company’s core asset base, with long-duration contracts providing the revenue visibility midstream investors value most.
At under 9 times forward EBITDA, with a well-covered 6.5% yield and management that has raised guidance twice in 2026, this is a name worth serious attention for investors looking for current income and steady appreciation tied to one of the more durable infrastructure trends of the decade.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
