FirstEnergy Corp. (FE) | The Buildout — AI Infrastructure
The Verdict
FirstEnergy is a regulated electric utility whose transmission, distribution, and regulated generation assets supply the enabling power layer for data centers across the Midwest and Mid-Atlantic. It does not sell chips, servers, or computing services; its AI-infrastructure role is to interconnect data center load, upgrade regional grid capacity, and in West Virginia offer bundled regulated power service. The business remains a rate-regulated utility, so every growth pathway must pass through regulatory approval and rate recovery.
| Market Cap | — |
| Revenue (TTM) | $15.8B |
| Revenue Growth | +12.6% |
| EBITDA Margin (TTM) | 29.6% |
| Net Debt | $28.9B |
| Earnings Beats | 4 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Total forecasted data center demand reached about 25 GW by Q2 2026, up 30% from Q1, with 6.4 GW contracted after adding 2.1 GW in the second quarter.
- The current plan includes a $36 billion five-year capital program, 75% of it under formula rates, and a 16% transmission rate base CAGR through 2030.
- Management reports more than $5 billion in competitive PJM transmission awards over the last four years, with 80–85% of transmission capex classified as non-competitive core work.
- West Virginia contracted plus pipeline data center demand reached 4.3 GW, up 137%, and the 1.2 GW Maidsville Energy Center is moving toward a fall 2026 CPCN decision.
- Base O&M is down more than $200 million, or 15%, since 2022, and management says average rates are 20% below in-state peers with the T&D component 35% below.
What We’re Watching
- The ~1.5 GW of additional data center contracts management said were expected within weeks of the July 29 call tests near-term conversion.
- Maidsville CPCN decision expected fall 2026; approval gates EPC/OEM/fuel lateral contracts and the long-term plan update.
- Updated five-year plan, expected later this year or early next year, is expected to show how much visible data center and West Virginia upside enters the formal plan.
- Maidsville cost has a source tension: the Q1 10-Q describes 1,200 MW CCGT plus 70 MW solar at about $2.7 billion, while Q2 intel uses about $2.5 billion for the 1.2 GW CCGT.
The data center and generation evidence in Q2 was materially stronger while all formal numeric guidance was reaffirmed, so the thesis is strengthening but not yet incorporated into the plan. The open question is whether the uncontracted portion of the 25 GW pipeline converts and whether the updated five-year plan captures a meaningful share of that upside.
Earnings Beat
FirstEnergy reported Q2 2026 revenue of $3.678 billion, GAAP earnings of $288 million, and core EPS of $0.50, down from $0.52 a year earlier. Management called the core EPS decline timing-related and in line with its Q1 communication; contracted data center demand rose to 6.4 GW after adding 2.1 GW in the quarter.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $3.7B | $4.2B | $3.4B | +8.8% |
| Gross margin | 64.3% | 62.2% | 66.8% | -250bps |
| EBITDA | $1.3B | $1.2B | $1.1B | +19.6% |
| EPS | $0.50 | $0.70 | $0.46 | +7.6% |
| Contracted data center demand | 6.4 GW | 4.3 GW | n/a | — |
We’re now focused on both executing today’s plan and creating pathways that have the potential to strengthen it.— Brian Tierney, July 29, 2026
Management tone: Between Q1 and Q2, management shifted from an execution-focused tone to broader public discussion of upside pathways, while Q&A remained direct. Executives repeated a hard line against utility commodity risk and added the phrase 'meaningful upside opportunities' to the long-term growth language without changing formal numeric guidance.
Management Guidance
Management reaffirmed 2026 core EPS guidance of $2.62–$2.82, the $6 billion 2026 capital plan, the $36 billion five-year capital plan, and the 6%–8% long-term core EPS CAGR through 2030, targeting near the top end. On the Q2 call, management added that the long-term growth target now includes 'meaningful upside opportunities.'
Trajectory
Trailing quarterly revenue is moving unevenly: Q1 FY2026 revenue was $4,202 million, up 10.7% sequentially, and Q2 FY2026 revenue was $3,678 million, down 12.5% sequentially, as purchased power, generation sales, and weather pass through. The computed margin signals are mixed but net positive at the EBITDA line: gross margin expanded about 400 basis points, operating margin compressed about 160 basis points, and EBITDA margin expanded about 560 basis points. Underlying earnings follow the regulated investment path, not the quarterly revenue swing.
The Model
The model projects FY+1 revenue of $16,200 million and EBITDA of $4,860 million, a 30.0% EBITDA margin. For FY+2 the model projects revenue of $17,800 million and EBITDA of $5,500 million, a 30.9% EBITDA margin. The near-term path reflects the existing regulated capital program, while FY+2 adds continued data center and transmission growth.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $15.1B | $16.2B | $17.8B |
| YoY Growth | — | +7.4% | +9.9% |
| EBITDA | $4.4B | $4.9B | $5.5B |
| EBITDA Margin | 29.1% | 30.0% | 30.9% |
Projections are the median of 5 independent model runs. The model’s revenue sits 9.7% above analyst consensus.
Management reaffirmed 2026 core EPS guidance of $2.62–$2.82, the $6 billion 2026 capital plan, the $36 billion five-year capital plan, and the 6%–8% long-term core EPS CAGR through 2030, targeting near the top end. On the Q2 call, management added that the long-term growth target now includes 'meaningful upside opportunities.'
What Could Go Right — and Wrong
- The ~1.5 GW near-term data center contracts close and the broader 25 GW pipeline continues converting at or above Q2 pace.
- Maidsville Energy Center receives CPCN approval in fall 2026 and reaches EPC/OEM/fuel lateral contract signing at the planned cost.
- The updated five-year plan, expected later this year or early next year, includes a material share of visible data center and West Virginia upside.
- FE wins further PJM open-window awards in the Q1 2027 board cycle, and open windows continue.
- The next West Virginia generation plant is formalized, with a Genco structure approved that allows faster build-out than traditional CPCN.
- The uncontracted portion of the 25 GW pipeline converts slowly or not at all, exposing the gap between pipeline and contracted load.
- Maidsville CPCN is delayed or denied, or the bundled West Virginia service agreement is rejected or restructured.
- Turbine and EPC cost inflation pushes Maidsville or the follow-on plant above disclosed cost estimates.
- PJM/FERC backstop and capacity-market rules remain merchant-oriented, limiting FE's participation.
- Rate-case outcomes in New Jersey, Maryland, Pennsylvania, or Ohio turn adversarial, reducing return on the capital plan.
Looking Ahead
The next twelve months are defined by regulatory and contract gates: the ~1.5 GW of expected near-term data center contracts, the Maidsville CPCN decision expected in fall 2026, PJM open-window proposals due around September 2026, and the updated five-year plan later this year or early next year. Rate-case activity in Ohio, New Jersey, and Maryland adds a parallel test of constructive recovery for the existing $36 billion capital plan.
- Within weeks of July 29, 2026Additional ~1.5 GW contracts — Tests conversion of pipeline demand into contracted data center load.
- Around September 2026PJM open-window proposals due — Tests future competitive transmission awards and regional planning demand.
- Fall 2026Maidsville CPCN decision — Approval gates EPC/OEM/fuel lateral contracts and long-term plan update.
- November 30, 2026Ohio rate plan staff report — Tests support for the Ohio three-year $2.5 billion investment plan.
- Later this year or early next yearUpdated five-year capital plan — Shows how much data center and West Virginia upside enters formal plan.
- Q1 2027PJM Board transmission awards — Confirms competitive transmission award flow from the 2026 open window.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $13.5B | $15.1B | $15.8B | +12.0% |
| Gross Margin | 67.5% | 55.0% | 53.4% | 1,258bps |
| EBITDA | $4.0B | $4.4B | $26.9B | +10.4% |
| EBITDA Margin | 29.5% | 29.1% | 29.6% | 43bps |
| Net Income | $978M | $1.0B | $1.1B | +4.3% |
| Free Cash Flow | −$1.1B | $2.5B | −$2.9B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)53.4%
- EBITDA Margin (TTM)29.6%
- Net Margin (TTM)6.9%
- ROIC5.5%
- FCF Conversion33.7%
- SBC / Revenue-0.4%
The Company
FirstEnergy is a regulated electric utility engaged in transmission, distribution, and regulated generation, serving more than six million customers across the Midwest and Mid-Atlantic. Its physical system includes more than 24,000 miles of transmission lines, two regional transmission operation centers, and 3,610 MW of controlled generation capacity. In the AI buildout, the company provides the electricity delivery and generation that data centers depend on, rather than computing or networking equipment.
The company operates through Distribution, Integrated, and Stand-Alone Transmission segments, with disclosed rate bases of $11.1 billion, $10.2 billion, and $5.4 billion respectively as of December 31, 2025. The model is rate-regulated: management emphasizes recovering authorized returns on utility plant, with 75% of the capital plan under formula rates and a stated strategy of avoiding commodity risk.
Business Segments
Competitive Landscape
Management frames FirstEnergy's advantage as location and regulated structure: the transmission system sits between the Northern Virginia data center hub and the New Albany, Ohio hub, and West Virginia offers fully bundled power service agreements. The supplied material names Dominion Energy and AEP via the Valley Link operation agreement but provides limited head-to-head discussion.
- Dominion EnergyNamed in the Valley Link transmission operation agreement with AEP and FirstEnergy.
- AEPNamed in the Valley Link transmission operation agreement with Dominion Energy and FirstEnergy.
Supply Chain
FirstEnergy sits at the power-delivery layer of the AI supply chain, connecting data center loads to the grid through regulated transmission, distribution, and bundled West Virginia generation. Peer mention is limited in the supplied source set.
More on FE: Earnings recap