Williams Explores Upstream Gas Assets to Power AI-Driven Data Centers

The Williams Companies, Inc. WMB is reportedly considering a rare strategic shift — exploring the acquisition of U.S. natural gas producing assets — to strengthen its position as a comprehensive energy partner for hyperscalers and AI data center developers. While traditionally a midstream operator, the move reflects evolving energy demands driven by artificial intelligence infrastructure.

Building a One-Stop Energy Solution for Hyperscalers

Over the past year, Williams has repositioned itself beyond pipelines, targeting the fast-growing digital infrastructure market. By potentially adding upstream gas production, the company aims to offer hyperscalers a single, integrated energy solution encompassing supply, transportation, storage and power generation. This approach could give Williams a competitive edge by simplifying procurement for customers otherwise forced to negotiate with multiple providers.

Williams’ Power Innovation business represents a fast-growing, high-return platform. With $5.1 billion in committed capital, these projects deliver grid solutions to meet surging data center and power demand across the U.S. Each project is backed by 10-year take-or-pay contracts with top-tier hyperscaler and utility customers, ensuring predictable returns. The segment’s scalability, speed-to-market capability and nonregulated cash flows position it as a key driver of long-term growth and value creation.

While discussions remain preliminary and no transaction is guaranteed, the company confirmed it continues to evaluate opportunities aligned with its natural gas-focused strategy.

AI Data Centers Are Reshaping Power Demand

The surge in AI adoption has sharply increased demand for reliable, around-the-clock power. Data centers require massive and uninterrupted electricity supply, placing unprecedented pressure on an already constrained U.S. power grid. Utilities are struggling with aging infrastructure, weather-related disruptions, project delays and local opposition to new generation facilities.

Against this backdrop, securing dependable fuel sources has become a strategic priority for both energy providers and hyperscalers.

Power Generation at the Core of Williams’ Growth Plan

Williams has already made significant investments to address these challenges. Its $2 billion Socrates power project in Ohio, expected online in the second half of this year, will deliver 440 megawatts under a power purchase agreement with Meta Platforms. The company has also announced two additional Ohio projects — Apollo and Aquila — backed by 10-year agreements and representing a combined investment of roughly $3.1 billion. Both projects are scheduled to come online in the first half of 2027.

These power assets complement Williams’ extensive midstream footprint of approximately 33,000 miles of natural gas pipelines and storage infrastructure, supporting expectations of stronger earnings in the years ahead.

Revisiting an Integrated Energy Model

Historically, integrated energy models combining production, transportation and processing were common in the U.S. oil and gas industry. However, most companies later shifted toward specialization, with Williams spinning off its upstream operations into WPX Energy in 2012. That entity ultimately merged with Devon Energy in 2021.

Although Williams has since divested most remaining production interests — including a Haynesville joint venture stake sold to Japan’s JERA for $1.5 billion — the renewed interest in upstream assets highlights how AI-driven power demand is reshaping long-term strategy.

Strategic Implications Ahead

Williams currently targets annual EBITDA growth of 5%-7%, with analysts watching closely for a potential upward revision as power and integrated energy initiatives scale. If executed, re-entering upstream production could mark a pivotal step in positioning the company as a critical energy backbone for the AI economy — linking natural gas supply directly to the power needs of hyperscalers.

WMB’s Zacks Rank & Key Picks

Oklahoma-based Williams is a premier energy infrastructure provider in North America. Currently, WMB has a Zacks Rank #3 (Hold).

Investors interested in the energy sector may consider some top-ranked stocks like Archrock, Inc. AROC, Oceaneering International, Inc. OII and TechnipFMC plc FTI. While Archrock sports a Zacks Rank #1 (Strong Buy) at present, Oceaneering International and TechnipFMC carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock started as a broader energy services provider but has steadily refocused its business to become a premier compression services company, primarily supporting natural gas production, processing and transportation. The Zacks Consensus Estimate for AROC’s 2025 earnings indicates 52.4% year-over-year growth.

Houston, TX-based Oceaneering International is one of the leading suppliers of offshore equipment and technology solutions to the energy industry. The Zacks Consensus Estimate for OII’s 2025 earnings indicates 76.3% year-over-year growth.

Newcastle & Houston-based TechnipFMC plc is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. The Zacks Consensus Estimate for FTI’s 2025 earnings indicates 24.7% year-over-year growth.

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This article originally published on Zacks Investment Research (zacks.com).

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