Entergy Corporation (ETR) | The Buildout — AI Infrastructure
The Verdict
Entergy is an integrated energy company that produces and delivers electric power to retail customers across Arkansas, Louisiana, Mississippi, and Texas. It does not sell chips, servers, or data-center hardware. What it sells is electricity, and increasingly the generation, transmission, and storage needed to deliver it, to the hyperscale data centers that train and serve AI models. Its AI exposure therefore arrives as contracted load growth plus a large construction program, not as a product cycle.
| Market Cap | — |
| Revenue (TTM) | $13.5B |
| Revenue Growth | +9.5% |
| EBITDA Margin (TTM) | 40.7% |
| Net Debt | $30.8B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- The four-year capital plan is $57 billion, raised $14 billion in Q1 2026 after the new Meta agreement, with transmission, renewables, and nuclear upgrades explicitly held off-plan.
- Fixed consideration on signed contracts totals $8,031 million, extending through 2048, on top of variable energy payments based on actual service.
- Data centers enter the plan only once a signed Electric Service Agreement exists, and then at minimum bill levels; management says no prospective data centers sit in the plan.
- The 7–12 GW hyperscale pipeline held flat even after Meta moved into the plan, and a new 3–5 GW traditional-industrial layer was added in Q2 2026.
- Roughly 60% of the 5-year equity plan is contracted, satisfying needs into 2028, and management targets fund-from-operations to debt at or above 15% throughout the outlook.
What We’re Watching
- The LPSC docket on the Meta expansion is progressing, with staff and intervenor testimony still to come.
- No new hyperscale agreement was signed in the latest quarter, and management describes the incremental interest as 'indications of interest' rather than full-fledged proposals.
- Plant island equipment stands at about 7.5 GW, at the low end of a 10–17 GW opportunity, with nothing added since Investor Day.
- Full in-plan load does not arrive until the combined-cycle units enter service in 2030–2031; until then, in-plan revenue is booked at minimum bills.
The thesis is intact but did not advance this quarter. Management reaffirmed 2026 guidance and its outlooks through 2030, added a traditional-industrial layer to the pipeline, and reported equity contracting at roughly 60% of the 5-year plan. Against that, no new hyperscale agreement was signed, the hyperscale pipeline range did not move, and the largest project still awaits an LPSC decision and equipment bookings that have not been added. The open question is whether the funnel converts into signed agreements fast enough to keep the back-loaded earnings step on schedule.
Earnings Beat
Entergy reported Q2 2026 revenue of $3,523.6 million, up 5.8% from $3,328.8 million a year earlier, with adjusted earnings per share of $1.03. Gross margin was 29.8% and EBITDA was $1,506.2 million at a 42.7% margin. The standout operating metric was 10% industrial sales growth as new and expansion projects ramped; management said adjusted EPS was slightly lower than the prior year as weather normalized against a warmer 2025.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $3.5B | $3.2B | $3.3B | +5.9% |
| Gross margin | 29.8% | 68.7% | 46.9% | -1710bps |
| EBITDA | $1.5B | $1.1B | $1.5B | +2.5% |
| EPS | $1.05 | $0.84 | $1.06 | −1.2% |
| Industrial sales growth | 10% | 15% | n/a | — |
we continue to have 7 to 12 gigawatts of hyperscale potential in our pipeline as well as 3 to 5 gigawatts of interest from traditional industrial segments— Drew Marsh, CEO, 2026-07-29
Management tone: Q2 2026 was a reaffirmation quarter rather than a new-raise quarter: management held 2026 guidance and the outlooks through 2030 instead of extending them. Several topics carried more caution than in Q1. It described the incremental pipeline interest as 'indications of interest' rather than full-fledged proposals, repeated that it has no firm timeline for new nuclear, and named a live New Orleans data-center moratorium as a localized opposition risk. It also volunteered direct detail on the Cottonwood acquisition's condition and timing, and reported equity contracting moving from roughly 30% to roughly 60%.
Management Guidance
For 2026, management reaffirmed its adjusted earnings per share guidance, along with outlooks through 2030. For the third quarter, other operation and maintenance expense is guided roughly $0.05 to $0.10 higher than the same quarter last year. Assuming normal weather in the third quarter, management expects the majority of the year-over-year earnings increase to arrive in the fourth quarter, driven by flex spending toward the end of the year. Longer term, the guide calls for retail sales growth of approximately 8.5% a year through 2029 driven by about 16% industrial growth, a 2029 adjusted EPS outlook of $6.40, and 2030 growth approximately the same as the disclosed 2028-to-2029 rate of 12%.
Trajectory
Revenue has moved within a band over the trailing year: $3,812 million in the quarter ended September 2025, $2,959 million in December 2025, $3,188 million in March 2026, and $3,524 million in June 2026. TTM revenue is $13,482 million and TTM EBITDA is $5,489 million at a 40.7% margin. The computed signals flag margin compression — gross and operating each down about 540 basis points and EBITDA down about 330 basis points on a trailing basis. The operating driver management cites is industrial load: industrial sales grew 14.9% in the quarter ended March 2026 and 10% in the quarter ended June 2026 as new and expansion projects ramped. Earnings are intentionally back-weighted, with the majority of the 2026 year-over-year increase expected in the fourth quarter.
The Model
The model projects FY+1 revenue of $13,904.5 million with EBITDA of $5,701 million at a 41.0% margin, and FY+2 revenue of $15,025.0 million with EBITDA of $6,280 million at a 41.8% margin. The near term is anchored by signed data-center agreements booked at minimum bill levels plus the $57 billion capital plan. FY+2 depends on construction progressing toward the 2030–2031 combined-cycle in-service dates and on load ramping under existing contracts.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $12.9B | $13.9B | $15.0B |
| YoY Growth | — | +7.4% | +8.1% |
| EBITDA | $5.7B | $5.7B | $6.3B |
| EBITDA Margin | 43.7% | 41.0% | 41.8% |
Projections are the median of 4 independent model runs. The model’s revenue sits 1.5% below analyst consensus.
For 2026, management reaffirmed its adjusted earnings per share guidance, along with outlooks through 2030. For the third quarter, other operation and maintenance expense is guided roughly $0.05 to $0.10 higher than the same quarter last year. Assuming normal weather in the third quarter, management expects the majority of the year-over-year earnings increase to arrive in the fourth quarter, driven by flex spending toward the end of the year. Longer term, the guide calls for retail sales growth of approximately 8.5% a year through 2029 driven by about 16% industrial growth, a 2029 adjusted EPS outlook of $6.40, and 2030 growth approximately the same as the disclosed 2028-to-2029 rate of 12%.
What Could Go Right — and Wrong
- A new signed hyperscale Electric Service Agreement, or an upward revision to the 7–12 GW pipeline range, would convert funnel interest into contracted load.
- A clean LPSC approval of the Meta expansion application with full cost recovery would ratify roughly $14 billion of in-plan capital.
- Transmission investments, renewables, and the River Bend nuclear upgrade coming into the plan would add capital and earnings beyond the current outlook.
- The transition from minimum bills to full contracted load as the combined-cycle units enter service in 2030–2031.
- The New Orleans data-center moratorium lifting would open a jurisdiction that currently cannot host a data center.
- An adverse or conditioned LPSC decision on the Meta expansion application would put roughly $14 billion of in-plan capital and the associated outlooks in question.
- The pipeline failing to convert: no new hyperscale agreement was signed in the latest quarter and the new interest is described as indications of interest.
- Execution slippage on the 2030–2031 in-service dates, which would push the earnings step right without changing the cost base.
- Equipment bookings staying at about 7.5 GW, the low end of a 10–17 GW opportunity, with nothing added since Investor Day.
- A counterparty re-scoping or moving load, with the 10-Q flagging the potential for stranded assets and reductions in demand for data-center power.
Looking Ahead
Over the next twelve months the story runs through three gates: the LPSC docket on the Meta expansion application, the Louisiana Phase 1A resilience and Mississippi storm-cost recovery filings, and whether the funnel produces a new signed hyperscale agreement. Because full in-plan load does not arrive until the combined-cycle units enter service, in-period results depend on minimum bills, weather, and the back-half earnings cadence management has described.
- Q3 2026Louisiana resilience Phase 1A filing — Smaller intermediate plan to continue resilience work while managing affordability.
- Q3 2026Mississippi storm cost filing — Winter Storm Fern recovery filing under new Mississippi legislation.
- Q3 2026Nuclear PTC transfer — Transfer of certain nuclear tax credits to a third-party purchaser for cash.
- Q4 2026Back-half earnings test — Most of 2026's YoY earnings increase expected in Q4, assuming normal weather.
- Not scheduledLPSC Meta expansion docket — Staff and intervenor testimony still to come; a ruling would cover roughly $14 billion of in-plan capital.
- Timing not disclosedCottonwood acquisition — Management flagged a timing mismatch between the plant's availability and arriving non-data-center industrial load; no decision date disclosed.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $11.9B | $12.9B | $13.5B | +9.0% |
| Gross Margin | 48.0% | 38.9% | 38.9% | 915bps |
| EBITDA | $5.1B | $5.7B | $5.5B | +11.2% |
| EBITDA Margin | 42.9% | 43.7% | 40.7% | +86bps |
| Net Income | $1.1B | $1.8B | $1.8B | +67.1% |
| Free Cash Flow | −$1.5B | −$2.7B | −$3.1B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)38.9%
- EBITDA Margin (TTM)40.7%
- Net Margin (TTM)13.5%
- ROIC4.8%
- FCF Conversion-57.3%
- SBC / Revenue-0.2%
The Company
Entergy is an integrated energy company engaged primarily in electric power production and energy delivery to retail customers. It owns and operates power plants with approximately 25,000 MW of generating capacity and delivers electricity to approximately 3.1 million utility customers in Arkansas, Louisiana, Mississippi, and Texas. Its business is organized around a single reportable Utility segment: the generation, transmission, distribution, and sale of electric power across those states, including the City of New Orleans. Into a base of traditional industrial load it is adding large-scale hyperscale data-center demand, which management says is the largest demand-growth contributor in its five-year plan.
The company operates as a vertically integrated regulated utility, owning generation, transmission, and distribution across its four-state footprint. Capacity is concentrated in Louisiana, which at 10,853 MW is the largest of the operating companies; Arkansas has 5,542 MW, Texas 3,275 MW, Mississippi 3,031 MW, System Energy's 1,251 MW Grand Gulf nuclear unit, and New Orleans 669 MW. Growth is funded by a $57 billion four-year capital plan with a $6.6 billion equity requirement, and is anchored by the Fair Share Plus pledge, under which data centers pay the full cost to serve them plus a share of fixed costs.
Business Segments
Competitive Landscape
Entergy's competitive position rests on its franchised service territory. A hyperscaler locating in a specific parish or county can only buy regulated power from the incumbent utility. The contract structure is cost-recovery rather than scarcity pricing: customers pay their entire incremental costs plus a tariff rate that includes fixed costs, all captured in the minimum bill. Behind-the-meter generation is a live alternative for the customer, and political permission is a real dependency, as the New Orleans moratorium shows.
- American Electric Power (AEP)Named in the source as the closest utility peer, an inferred ecosystem neighbor. Entergy's filings do not discuss it.
Supply Chain
Entergy sits at the power layer of the AI build-out, upstream of the data center and downstream of the fuel and equipment chain. Energy Transfer and Primoris name it directly; most equipment links come from wiring rather than company statements.
More on ETR: Earnings recap