Energy Transfer: How a Boring Pipeline Company Became the Backbone of the US’ AI Boom

A lot of you have been asking me to cover boring investments lately. 

The kind that pay dividends, don't move much, and let you sleep at night.

Fair enough. I get it. Not everything needs to be a moonshot.

So here's one: a pipeline company that yields 8%. This boring investment just stumbled into becoming the backbone of America's AI boom. 

And the market hasn't figured it out yet.

Energy Transfer $ET ( ▲ 1.38% ) is trading at $16.60 right now. Six months ago, everyone thought this company was about building an LNG export terminal in Louisiana. 

That project just got canceled. But here's the thing, $ET didn't collapse. It barely moved.

Why? Because while investors were watching the front door, Energy Transfer walked out the back and signed 5.5 gigawatts worth of contracts to power AI data centers. That's enough electricity to run a small country.

This is what boring investments look like when they accidentally become essential infrastructure. You collect your dividend every quarter, and then one day you wake up and realize you own a piece of the AI supply chain.

Think of it like this. You own a gas station on a highway. For years, you've been planning to build a massive truck stop with a restaurant and hotel. Then one day, Tesla announces they're building their largest Supercharger station right next to you, and they need you to supply the power.

You cancel the truck stop. Smart move.

That's basically what Energy Transfer did. The Lake Charles LNG terminal would have cost over $10 billion and taken years to build. Meanwhile, tech companies like Oracle are literally lining up to pay Energy Transfer for gas pipelines right now. These aren't small deals either.

The three big wins from 2025:

Add those up and you get infrastructure that powers AI training centers for the next 10 to 20 years. And here's what matters most, these contracts are fee-based. 

Energy Transfer gets paid regardless of whether gas prices go up, down, or sideways.

Most people think of Energy Transfer as a commodity play. When gas prices go up, $ET goes up. When prices fall, the stock falls. Simple.

But that's changing. These data center contracts work more like a utility bill. You pay for the infrastructure whether you use it or not. It's a steady, predictable income.

Right now, AI companies have a massive problem. The U.S. power grid can't handle what they're building. Training a single large AI model can use as much electricity as a small town uses in a year. You can't just plug that into the existing grid without blowing transformers.

Energy Transfer's solution? Bypass the grid entirely. They're running gas pipelines directly to the data centers, which generate their own power on-site. No federal regulators to navigate. No utility companies involved. Just direct supply.

And because most of this is happening in Texas, where Energy Transfer owns intrastate pipelines, they don't even need federal approval. They can move fast while competitors are stuck in regulatory limbo.

Let me show you why 8% yield matters. If you buy $10,000 worth of ET today, you collect $800 in annual dividends. That's roughly $200 every quarter.

But here's the better part, that dividend is covered 1.9 times by actual cash flow. So, Energy Transfer generates almost twice the cash they need to pay the dividend. They're not stretching to make payments.

The company brought in $3.84 billion in EBITDA during Q3 2025. Revenue came in lower than expected at $19.95 billion (analysts wanted $21.91 billion), but that was because natural gas prices dropped—not because they lost customers.

Actually, volumes went up. NGLs (natural gas liquids) jumped 10%. Refined products hit record numbers. The core business is getting stronger, even though the headlines looked ugly.

Chairman Kelcy Warren bought 2 million shares in August 2025. He spent roughly $35 million of his own money at an average price of $17.33 per share.

You're buying at $16.60.

When the chairman, who knows more about this company than anyone on earth, buys above where $ET trades today, that tells you something. Either he's wrong about his own company (unlikely), or the market hasn't caught up yet (very likely).

Here's what worries me. Global LNG is heading into what analysts are calling "the year of the glut" in 2026. New supply from Qatar and the Gulf Coast is hitting the market. International gas prices will probably stay low.

But domestic demand? That's exploding. AI doesn't care if European gas is cheap. These data centers need American supply, connected to American infrastructure, available 24/7.

So Energy Transfer faces two opposite forces. Weak international markets (bad for traditional business) vs unprecedented domestic demand (great for the new AI contracts).

My read: the new business more than offsets the old headwinds. But you need to know both sides exist.

Analysts have price targets between $22 and $25. That's 35% upside from today's price, plus the 8% dividend while you wait.

If you value Energy Transfer like a utility, which makes sense given these long-term supply contracts, the math works out to around $21.50 based on 2026 cash flow estimates.

$ET trades at a 9.5 times forward earnings multiple right now. The sector average is 12 to 14 times. Even if ET just catches up to average, you're looking at meaningful gains.

I can't tell you what to do with your money. But here's how I'd think about it.

You're getting paid 8% yield to own a company that:

Energy Transfer canceled a risky $10 billion LNG project and redirected that capital into faster-payback infrastructure. That's good management.

The stock goes nowhere for months, then suddenly reprices when the market figures out what changed. Based on the data center contracts alone, that repricing probably happens in 2026.

You could wait for confirmation. But by then, you'll be buying at $20 instead of $16.60. And you'll have missed four quarters of 8% dividends.

That's the trade-off. Welcome to investing.

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