American Electric Power (AEP) Downgraded to 'Neutral', Price Target Trimmed

American Electric Power Company, Inc. (NASDAQ:AEP) is included among the 10 Best Performing Utility Stocks in 2025.

American Electric Power Company, Inc. (NASDAQ:AEP) is one of the largest electric utilities in the United States, powering millions of homes and businesses each day.

On January 12, BofA analyst Ross Fowler downgraded American Electric Power Company, Inc. (NASDAQ:AEP) from ‘Buy’ to ‘Neutral, while also trimming its price target from $131 to $122. The downgrade is primarily driven by valuation concerns, as AEP surged by 25% in 2025, compared to gains of around 12.7% from the overall S&P Utility index. The analyst highlighted that AEP is trading at a 4% premium compared to its peers, limiting its upside potential. Moreover, while BofA believes that the utility has a strong growth outlook, especially in Texas, it expects regulatory relationships to take time to develop and sees ‘limited near-term prospects’.

That said, American Electric Power Company, Inc. (NASDAQ:AEP) continues its focus on growth and announced on January 8 that it would acquire solid oxide fuel cells from Bloom Energy. The $2.65 billion deal is part of the utility’s plans to develop and build a fuel cell power generation facility in Wyoming. Moreover, AEP also disclosed that it had already signed a 20-year offtake agreement with an unnamed customer for 100% of the output from the planned facility.

While we acknowledge the potential of AEP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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