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Vistra (NYSE:VST) kicked off 2025 with a bang, posting $1.24 billion in Q1 adjusted EBITDAa 53% jump year-over-yearand laying the groundwork for more than $6 billion in EBITDA by 2026, driven by surging data center demand.
CEO Jim Burke pointed to balanced strength across generation, commercial and retail segments, with the Energy Harbor acquisition adding two extra months of earnings this quarter. He reaffirmed 2025 guidance of $5.5 billion$6.1 billion in adjusted EBITDA and $3 billion$3.6 billion in free cash flow before growth, while eyeing a 2026 EBITDA midpoint significantly above $6 billion thanks to a diverse asset mix and a hedging program locking in roughly 95% of expected generation.
CFO Kristopher Moldovan said retail growth in key markets also buoyed results, and previewed at least $2 billion in shareholder returns via buybacks and dividends over the next two years. Meanwhile, Vistra is plowing $700 million into solar and storage projects in Texas and Illinois under contracts with Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT), positioning itself as a go-to power partner for hyperscale facilities.
On the call, analysts zeroed in on Texas's SB6 legislation and PJM regulatory clarity, asking about co-located load deals for data centers. Burke acknowledged that customer interest remains very high, but final agreements hinge on evolving rules. When probed about 2027 and beyond, he said the strong earnings momentum seen in 2026 should carry into subsequent years, thanks to robust demand growth and continued hedging discipline.
Why it matters: With AI and data center expansions fueling energy needs, Vistra's confident 2026 outlook and strategic renewables investments underscore its role as a cornerstone power provideroffering investors visibility on both growth and cash returns.
Investors will look to mid-year regulatory updates in Texas and PJM and track project progressand Q2 results in early Augustto confirm that Vistra's data center play continues to translate into outsized earnings and free cash flow.
This article first appeared on GuruFocus.