In real estate, the mantra is location, location, location. That’s the principle behind the recent surge in NiSource (NYSE: NI) stock. NiSource is a utility company that has suddenly become one of the darlings of the analyst community. In fact, despite the firm being up 15% in 2026, KeyCorp just raised its price target for NI. But is it setting a ceiling or a floor?
At a surface level, NiSource is an average regulated utility that delivers natural gas and electricity to residential, commercial, and industrial customers. But the company has found itself in high demand as the data center buildout pushes into the nation’s heartland.
NiSource Proves Why Location Matters
The bull case for NI isn’t new, but it deserves explanation. Hyperscalers need dedicated data centers to house the servers and related equipment needed to power their artificial intelligence (AI) ambitions. But this isn’t as simple as “if you build it, they will come.”
That’s due to energy. AI is a hungry beast. So, if there’s going to be a data center, there has to be ample 24/7 power to keep it running.
This demand is pushing up against a supply problem in an aging electrical grid that needs to be updated for many applications beyond data centers.
That's why nuclear energy is back in fashion. But the payoff is years away. Which brings natural gas into the equation.
This has become the preferred fuel for hyperscalers, and NiSource may play a key role.
One of NiSource’s key operating regions is the Midwest. This is becoming strategically important for data centers for three key reasons:
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Cheaper land
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Cheaper power
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Available grid capacity
But why NiSource? KeyCorp’s analysis put the focus on the company’s key jurisdictions having constructive environments, including a relatively modest regulatory lag. That means companies have more cost certainty, and NiSource generates stable and predictable earnings.
Is NI Priced for Perfection?
NI is up more than 16% in 2026. That’s pushed its price-to-earnings ratio over 24x. That's a premium to the broader market and its sector, but not an egregious one. Nevertheless, investors do have to consider whether the biggest gains have already been accounted for.
NI has been in a steady uptrend since bottoming near $38 last spring, making a persistent series of higher lows that reflects accumulation rather than speculation. The 50-day moving average, currently at $46, has acted as a reliable floor through several pullbacks. That included a sharp but short-lived dip in early March that was quickly bought.
The stock closed on April 9 at $48.47, well above that moving average, which is a constructive sign. The concern worth flagging is momentum. The 14-day RSI has climbed to the mid-60's, which puts it just below overbought territory. The signal line at 53 confirms the broader uptrend is intact, but the gap between the two suggests the stock may need to digest recent gains before the next leg higher.
Volume has been relatively steady without the kind of climactic surge that typically signals a top, which is mildly encouraging for bulls. Taken together, the chart suggests NI is extended in the short term but not broken. A pullback toward the 50-day moving average near $46 would represent a more comfortable entry point for investors who believe the data center thesis has further to run.
Why Utilities Like NiSource Are Gaining Investor Attention
A 16% year-to-date gain on a regulated utility is unusual, and momentum cuts both ways. Utilities tend to attract defensive rotation, but that same dynamic can unwind quickly when risk appetite returns.
The valuation question is real, but context matters. Regulated utilities rarely trade at growth multiples unless the market sees a visible, durable earnings catalyst. In NiSource's case, the data center narrative provides exactly that. If even a handful of hyperscaler agreements materialize in its key jurisdictions, the earnings growth trajectory could make 24x look reasonable in hindsight.
That said, this is a stock where much of the easy money may already be made. The analyst community has found it. KeyCorp's raised price target is unlikely to be the last upgrade, but upgrades also tend to cluster near peaks as much as they do near inflection points. Investors who missed the initial move would be wise to wait for a pullback rather than chase a utility into extended territory.
The bottom line is that NiSource has earned its moment. Its Midwest footprint, constructive regulatory environment, and natural gas infrastructure put it squarely in the path of one of the most capital-intensive buildouts in modern technology history. Location, as it turns out, really does matter. The question now is how much of that advantage the market has already priced in.
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The article "Why This Midwest Utility Is the Hottest Stock on Wall Street Right Now" first appeared on MarketBeat.
