Goldman Flags European Utilities to Benefit From Demand Boom

Key Moments

Goldman Sachs lifted its power demand growth outlook for Europe to 1.5-2% per year through 2028 and raised sector valuation targets to about 16x P/E.
RWE and Solaria received raised price targets of €63.50 and €25.50 respectively, both with “buy” ratings and strong EPS growth expectations through 2030.
Engie, Naturgy, Enel, and PPC also carry “buy” ratings, offering a mix of diversified, defensive, and merchant power exposure to Europe’s energy transition.

Goldman Sachs Upgrades View on European Utilities

Investing.com — Goldman Sachs has turned more positive on European utility stocks, arguing that the sector is entering an “earnings super-cycle” supported by accelerating artificial intelligence adoption, rising electrification, and heightened energy security requirements. In its latest sector work, the firm raised its forecast for European power demand growth to 1.5-2% annually through 2028 and moved its target valuation framework to approximately 16x P/E.

The broker pointed to the rapid buildout of AI and datacenter infrastructure as a key structural driver, estimating that these assets could account for as much as 25% of Europe’s electricity consumption by 2035. Against this backdrop, Goldman Sachs sees long-term growth prospects for utilities as strong and still underappreciated by the market.

Top Stock Selections Across the Utility Landscape

Goldman Sachs highlighted a group of preferred names spanning integrated utilities, renewables pure-plays, merchant power, and more defensive exposures. The selections are positioned to capture different aspects of the emerging earnings cycle tied to the energy transition and datacenter-led demand.

Company	Focus	Rating	Price Target	Key Earnings Drivers
RWE	Integrated utility	Buy	€63.50	FlexGen margins, renewables pipeline, datacenter and energy security demand
Solaria	Renewables pure-play	Buy	€25.50	Capacity build-out, battery storage revenues, 38% EPS CAGR to 2030
Enel	Diversified electrification exposure	Buy	€12	Renewables, networks, retail, 9% average EPS CAGR across electrification compounders
PPC (Public Power Corp.)	Merchant power	Buy	Not specified	High sensitivity to power prices, 16% net income uplift in 2026 scenario
Naturgy	Defensive gas and power	Buy	€30.50	FlexGen returns, dividend profile, valuation discount
Engie	Large-cap diversified utility	Buy	€32.10	Flexible generation, renewables, infrastructure, 5% sector-relative premium

RWE: Preferred Integrated Utility

RWE is identified as Goldman Sachs’ top pick among integrated utilities. The bank reiterated its “buy” stance and lifted its price target to €63.50. The company is described as benefiting from better margins in flexible generation (FlexGen) and from a substantial renewables development pipeline, with earnings per share forecast to rise consistently through 2030.

According to the analysis, RWE is well placed to gain from the ongoing focus on energy security across Europe and from rapidly growing electricity needs of datacenters in the region.

Solaria: High-Conviction Renewable Pure-Play

Solaria is presented as Goldman Sachs’ highest-conviction idea among pure-play renewable names. The firm maintains a “buy” rating and has increased its price target to €25.50. The Spanish solar developer is projected to deliver the strongest EPS expansion of any stock in the bank’s coverage, with a compound annual growth rate of 38% through 2030.

This growth outlook is tied to a faster rollout of new solar capacity and incremental income streams from battery storage assets. Despite that trajectory, Solaria is described as the least expensive stock in its peer set on a 2030 P/E metric, trading at just 8x.

Enel: Broad Electrification Exposure

Enel is highlighted as the most comprehensive way to access Europe’s electrification theme. Goldman Sachs kept its “buy” rating and reaffirmed a €12 price target. The utility’s footprint spans renewables, networks, and retail activities across several geographies, which the broker says offers diversification within the energy transition.

The report notes a 9% average EPS CAGR across what Goldman Sachs refers to as the electrification compounders, framing Enel within a broader group of names expected to deliver robust earnings momentum.

PPC: Leveraged to Merchant Power Prices

PPC (Public Power Corp.) is singled out as Goldman Sachs’ preferred vehicle for merchant power exposure. The Greek utility is assessed as having the strongest near-term earnings leverage to higher power prices, with scenario work pointing to a 16% increase in net income in 2026 alone.

Holding a “buy” rating, PPC is viewed as a straightforward beneficiary of the power price spike linked to the Middle East conflict as well as of Greece’s longer-run electrification goals.

Naturgy: Defensive Play on the Energy Transition

Naturgy is positioned as a more defensive choice within the bank’s top ideas. Goldman Sachs kept its “buy” rating and raised the price target to €30.50. The Spanish gas and power company is said to benefit from improved returns in flexible generation and from a robust dividend profile.

Despite steady earnings growth, Naturgy is characterized as trading at a discount to sector peers. In Goldman Sachs’ view, it offers an appealing, lower balance sheet risk path to gaining exposure to Europe’s energy transition.

Engie: Leading Large-Cap Diversified Utility

Engie completes the set of highlighted names as Goldman Sachs’ favored large-cap diversified utility. The stock carries a “buy” rating and a raised price target of €32.10. The French group’s portfolio includes flexible generation, renewables, and infrastructure assets across multiple European markets, which the broker argues aligns it closely with the upgraded structural outlook for power demand.

Goldman Sachs applies a 5% premium relative to the broader sector in its valuation for Engie, citing the company’s size and the perceived quality of its earnings.