Bank of America Securities identified two energy sector leaders primed to capitalize on off-grid power generation for data centers as of December 8, 2025. The U.S. grid’s limited capacity and mounting connection costs have shifted operators’ focus to onsite, off-grid energy resources. Within this environment, GE Vernova and Caterpillar earn “Buy” ratings, supported by ambitious price targets reflecting strong energy demand tied to data center expansion.

Grid Challenges Boost Off-Grid Energy Solutions

Data center growth is increasingly constrained by the U.S. electrical grid’s capacity limits. Banks of America’s research shows these bottlenecks drive operators toward off-grid generation, where gas-fired power accounts for roughly half of the planned onsite capacity increases. Battery storage, solar, and nuclear power alternatives also contribute notably to this rising shift. Industry players specializing in gas turbines and engines for prime onsite power stand to benefit from these dynamics.

GE Vernova (GEV) currently commands a price objective of $725, grounded on a 26x enterprise value-to-EBITDA multiple of its 2027 adjusted EBITDA projection. This multiple significantly exceeds the sector’s peer group average of 13x based on 2026 estimates. Analysts deem the premium justified due to GEV’s above-average earnings growth prospects and margin expansion potential. The company’s recent milestone involves securing its first international onshore wind repower upgrade contract with Taiwan Power Company. Despite optimism, risks remain including potential shifts to government wind turbine incentives, execution of a $500 million cost-reduction plan by 2028, natural gas turbine demand softness, and service contract cost overruns.

Caterpillar’s Position in Power Generation Expansion

Caterpillar (CAT) also receives a “Buy” with a $650 price target, reflecting a 27x multiple on anticipated 2026 earnings per share. This valuation surpasses the company’s historical 15-year range of 15-18x, underscoring its resilient product lineup and exposure to favorable macro trends. Caterpillar benefits from infrastructure spending growth, shifting construction cycles, stronger miner free cash flow, aging fleets, and data center power demands. Truist Securities highlights Caterpillar’s notable multiyear power generation engine backlog as a key revenue visibility factor.

Moreover, Caterpillar has forged a strategic partnership with Vertiv to collaborate on innovative energy solutions for data centers. The company faces headwinds such as trade tariff uncertainties, fluctuating capital expenditures in mining and energy sectors, pricing pressure, and challenges in dealer sales and inventory cycles.

Energy Sector Outlook

The growing reliance on off-grid energy resources for data centers marks a pivotal shift in the power generation landscape. Gas turbines remain the cornerstone of this expansion, with emerging battery, solar, and nuclear technologies gaining traction. Bank of America’s bullish outlook on GE Vernova and Caterpillar highlights the importance of diversified energy portfolios amid U.S. grid limitations.

For investors, these companies represent strategic access points into the expanding energy infrastructure supporting digital growth. The evolving sector emphasizes adaptive, resilient, and sustainable capacity to meet the surge in off-grid data center power demand.

Energy Sector Watch Ahead

With a $725 price target for GE Vernova based on 2027 EBITDA and a $650 target for Caterpillar predicated on 2026 EPS, these stocks reflect heightened investor confidence in off-grid power solutions driven by data center expansion. The U.S. grid’s capacity constraints and resulting off-grid energy adoption underscore critical opportunities—and risks—in the evolving energy market. These dynamics warrant close attention from stakeholders monitoring power generation amid rapid digital infrastructure growth.