The Williams Companies, Inc. (WMB) | The Buildout — AI Infrastructure
The Verdict
Williams owns the middle of the North American natural gas chain: long-haul interstate pipelines, the gathering systems that collect gas from wellheads, the plants that strip liquids out, the fractionators that split them, and the storage that balances it all. Its AI linkage is Power Innovation, a business that builds gas-fired generation and battery storage at data-center sites and sells the power under long-term contracts. It also expands Transco to serve power and data-center load, and sells pipeline capacity as backup fuel where data centers would otherwise run diesel. Most cash flow today still comes from the legacy pipeline and gathering base, not from AI.
| Market Cap | — |
| Revenue (TTM) | $12.2B |
| Revenue Growth | +8.8% |
| EBITDA Margin (TTM) | 57.5% |
| Net Debt | $30.6B |
| Earnings Beats | 3 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- The 10-Q prints $31,645M of remaining performance obligations — $21,660M at Transco, $3,664M at NWP — with a $13,884M "thereafter" tail that runs past 2030.
- Management lifted its long-term EBITDA CAGR target to 11%+ through 2030 from 10%+, and describes it as centered on the existing contracted book and excluding future commercializations.
- The Blackstone-led Power Innovation JV provides $5.34B of committed capital at a capped 6.35% cost of equity; management says it improves the five projects' cash-flow-to-invested-capital ratio by about 56%.
- Five Power Innovation projects are underway; an analyst cited ~$9.6B announced in ~18 months, which management did not dispute.
- Socrates Phase 1 (200 MW) is in service, delivered roughly 14 months from property handover; Neo carries a ~5x build multiple and a 12.5-year contract.
What We’re Watching
- Leverage is expected at ~3.9x year-end 2026 and ~3.75x normalized against an internal 4x ceiling, and management frames it as a 2026–2027 issue before a 2028 earnings step-up.
- FY2026 growth CapEx guidance was updated on the Q2 2026 call but no new figure was given; the last printed figure was a $7.3B midpoint.
- Socrates Phase 2 is targeted before year-end 2026, and management said the ~14-month build may not translate directly into earlier in-service dates on later projects.
- NWP's largest customer, Puget Sound Energy, was about 31% of NWP operating revenue in FY2025, versus about 9% for Duke Energy at Transco.
The thesis looks steady on current numbers and strengthening on the pipeline of projects and contracted book. Adjusted EBITDA grew 6% in Q2 2026, the FY2026 guide was raised $200M at the midpoint, and management keeps moving its long-term target up while explicitly excluding future commercializations from it. The open question is timing: the AI-linked power earnings are back-end loaded into 2028 and beyond, the counterparty is undisclosed, and the leverage easing rests on a 2028 step-up the company has described but not quantified.
Earnings
Williams reported Q2 2026 revenue of $3,053M, up from $2,770M a year earlier, at an 83.3% gross margin. The company's own adjusted EBITDA measure was $1.92B, up 6% year over year and up 10% year to date. Growth was led by the Gulf businesses and natural gas storage, each up 23%.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $3.1B | $3.0B | $2.8B | +10.2% |
| Gross margin | 83.3% | 82.1% | 38.1% | +4520bps |
| EBITDA | $1.8B | $1.7B | $1.5B | +17.0% |
| EPS | $0.68 | $0.71 | $0.45 | +51.2% |
| Adjusted EBITDA | $1.92B | $2.25B | n/a | +6% |
under 18 months since commercialization… it was actually closer to 14 months— Chad Zamarin, President & CEO, 2026-08-03
Management tone: Across the two calls the tone moved from holding to raising. Management put an explicit dollar range on FY2026 adjusted EBITDA ($8.3B–$8.5B) after the prior call's "upper half" framing, lifted the long-term CAGR target to 11%+, and described the target as a floor ("plus is plus"). It volunteered the less flattering details — the ~9x net Momentum multiple and the 180-day share-release schedule — while declining to quantify Momentum synergies or name the hyperscaler counterparty for stated reasons.
Management Guidance
Management guides FY2026 adjusted EBITDA to $8.3B–$8.5B, raised $200M at the midpoint for an assumed quarter of Momentum ownership plus improved base business. It cited hurricane season, weak summer gas prices, rig activity, Sequent winter upside and Socrates Phase 2 timing as the swing factors rather than major operational uncertainty. Growth CapEx guidance was updated to reflect spending on new projects but no new figure was given, and the long-term EBITDA CAGR target was raised to 11%+ through 2030.
Trajectory
Quarterly revenue has been uneven — $2,923M in Q3 FY2025, $3,198M in Q4 FY2025, $3,030M in Q1 FY2026 and $3,053M in Q2 FY2026 — because the reported top line carries large derivative mark-to-market moves in the marketing segment. The fee-based core grew 10.1% year over year in Q1 2026 ($2,003M to $2,206M). The computed signals flag revenue as decelerating while gross and EBITDA margins expand; project step-ups (SESE 2027, Shelby Connector H1 2028, Neo H2 2028, Delta Access early 2029) and a full year of Momentum are the next layers.
The Model
The model projects FY+1 revenue of $12,600M and EBITDA of $8,442M at a 67.0% margin, then FY+2 revenue of $13,950M and EBITDA of $9,430M at 67.6%, with margins above the 57.5% trailing-twelve-month level. The near term is anchored by the contracted book and a full year of Momentum contributions; FY+2 adds the project step-ups as they enter service.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $11.9B | $12.6B | $13.9B |
| YoY Growth | — | +5.5% | +10.7% |
| EBITDA | $6.7B | $8.4B | $9.4B |
| EBITDA Margin | 56.5% | 67.0% | 67.6% |
Projections are the median of 5 independent model runs. The model’s revenue sits 0.3% above analyst consensus.
Management guides FY2026 adjusted EBITDA to $8.3B–$8.5B, raised $200M at the midpoint for an assumed quarter of Momentum ownership plus improved base business. It cited hurricane season, weak summer gas prices, rig activity, Sequent winter upside and Socrates Phase 2 timing as the swing factors rather than major operational uncertainty. Growth CapEx guidance was updated to reflect spending on new projects but no new figure was given, and the long-term EBITDA CAGR target was raised to 11%+ through 2030.
What Could Go Right — and Wrong
- Additional Power Innovation projects commercialized before year-end 2026, as management expects.
- A signed contract at 15–20 years, longer than Neo's 12.5 years, would show customers treat behind-the-meter gas as permanent infrastructure.
- Northeast G&P holding its 8% growth pace from the Q2 2026 call, versus 2% on the prior call, would prove embedded conservatism.
- Another Transco upsize on the existing footprint, after Power Express went 689 → 750 → 800 MMcf/d.
- A second, distinct Power Innovation counterparty would ease the concentration question.
- The 2028 earnings step-up slips; the leverage easing and next-wave funding capacity both rest on it.
- Growth CapEx runs materially above the last printed figure without matching EBITDA.
- Equipment and balance-of-plant delivery push project in-service dates to the right.
- A data-center counterparty reduces scope, or utility customers convert GW-scale pipelines more slowly than signed.
- Weak gas prices extend through 2027 and suppress producer activity, gathering volumes and Sequent.
Looking Ahead
Over the next 12 months the signposts are Socrates Phase 2 before year-end 2026, further Power Innovation commercializations "between now and the end of the year," NESE compression at the end of 2026, and integration of Momentum. Williams also pointed to storage announcements "later this year" and a Cogentrix divestiture "later this year," and said FY2026 growth CapEx guidance was updated without a new figure.
- Before year-end 2026Socrates Phase 2 in service — A second on-time delivery would de-risk the project pipeline.
- Between now and end of yearNew Power Innovation projects — Commercializations would confirm the announcement cadence.
- By end of 2026Atlas backup-fuel lateral — Converts a data center's diesel backup generation to gas.
- End of 2026NESE compression work — Offshore build follows mostly in 2027; on time and on budget.
- Early 2029Delta Access in service — 2.25 Bcf/d initial, expandable to 3.5 Bcf/d.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $10.5B | $11.9B | $12.2B | +13.7% |
| Gross Margin | 58.7% | 57.1% | 73.6% | 155bps |
| EBITDA | $5.6B | $6.7B | $7.0B | +21.3% |
| EBITDA Margin | 52.9% | 56.5% | 57.5% | +357bps |
| Net Income | $2.2B | $2.6B | $3.1B | +17.7% |
| Free Cash Flow | $2.3B | $899M | −$214M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)73.6%
- EBITDA Margin (TTM)57.5%
- Net Margin (TTM)25.2%
- ROIC8.9%
- FCF Conversion-3.0%
- SBC / Revenue-0.1%
The Company
Williams owns and operates the middle of the North American natural gas chain. The FY2025 Form 10-K profile lists operations in 11 supply areas serving about 800 customers, over 32,000 miles of pipelines in 24 states and the Gulf of America, 35 natural gas processing facilities, 9 NGL fractionation facilities, about 23 million barrels of NGL storage, and 423 Bcf of natural gas storage. It charges fees for moving, treating, processing, storing and selling gas, and most of that revenue is fee-based and contracted.
The company operates through four reported segments: Transmission, Power & Gulf (Transco, NWP, MountainWest plus a 50% stake in Gulfstream), Northeast G&P, West, and Gas & NGL Marketing Services. Power Innovation — the behind-the-meter gas power business — is not a separately reported segment. Management describes the next several years as the "decade of pipe and power," with transmission and power growing faster than gathering and processing, which it expects to shrink as a share of a growing whole without shrinking in absolute terms.
Business Segments
Competitive Landscape
The competitive field for data-center gas and behind-the-meter power is crowded, with Enbridge, Energy Transfer, Kinder Morgan, ONEOK, DT Midstream, TC Energy and Targa all tagged in the supply-chain data. Management says its customer discussions are not exclusive. Its stated structural positions are Transco, which management calls the largest gas transmission pipeline system along the Gulf Coast corridor, and speed to power, with Socrates built in roughly 14 months from property handover.
- Enbridge (ENB)Tagged in the wiring map for gas midstream and data center behind-the-meter gas; not discussed on the calls.
- Energy Transfer (ET)Tagged for natural gas and NGL midstream and natural gas infrastructure for data centers; not discussed on the calls.
- Kinder Morgan (KMI)Tagged for natural gas midstream and data center gas power; not discussed on the calls.
- TC Energy (TRP)Tagged for US gas pipeline corridors, LNG feed gas and data center expansions; not discussed on the calls.
- DT Midstream (DTM)Tagged as a pure-play gas midstream and data center pipelines operator; not discussed on the calls.
Supply Chain
Williams sits in the middle of the gas chain, buying turbines, pipe, compression and construction, then selling transportation, storage, processing and power to utilities, LNG terminals and data-center developers. No neighbor transcript in the source set names Williams or Transco directly.
More on WMB: Earnings recap