Undervalued by 15%, This Utilities Stock Could Be an Unexpected AI Winner

On a recent episode of The Morning Filter podcast, 3 Stocks to Sell and 3 Stocks to Buy for October, Morningstar Chief US Market Strategist Dave Sekera highlighted Alliant Energy as one of his stock picks. As the parent of Interstate Power and Light and Wisconsin Power and Light, Alliant is positioned to benefit from growing data center demand and constructive regulatory environments in Iowa and Wisconsin. Morningstar’s analyst expects earnings growth to reach the high end of management’s guidance and accelerate beyond 2027. The stock trades at a 15% discount to our $77 fair value estimate and offers a 3.3% dividend yield.

Key Morningstar Metrics for Alliant

• Fair Value Estimate
  : $77
• Star Rating
  : 4 Stars
• Economic Moat Rating
  : Narrow
• Uncertainty Rating
  : Low

Alliant Energy has boosted its capital investment plan, in large part to support rising data center electricity demand. The company projects a 60% increase in demand by 2031. Alliant has five data center customers as of early 2026, representing 3.4 gigawatts of demand. Three of the data center campuses have started construction in Alliant’s service territory. The other two have signed electric service agreements. Management has discussed 2-4 gigawatts of additional data center opportunities that could materialize later in the planning period. We expect continued investments to support this growth.

Economic Moat Rating

State and federal regulators typically grant regulated utilities exclusive rights to charge customers rates that allow the utilities to earn a fair return on and a return of the capital they invest in building, operating, and maintaining their distribution networks. In exchange for regulated utilities’ service territory monopolies, state and federal regulators set returns at levels that aim to minimize customer costs while offering fair returns for capital providers. We believe Alliant has healthy relationships with the regulators in its two main states, Iowa and Wisconsin, as exemplified by mechanisms that allow the firm to more closely earn its allowed return on equity.

Read more about Alliant’s moat rating.

Fair Value Estimate for Alliant Stock

Our fair value estimate is $77 per share. Our near-term profit outlook accounts for recently approved rate increases, completed generation projects, normal weather, and a gradual improvement in power demand. We estimate that Alliant will invest $17.8 billion in 2026-30. Based on this investment outlook, we expect Alliant’s long-term annual earnings growth to reach the top end of management’s 5%-7% forecast over 2026-27 and exceed management’s 7%-plus outlook through 2029. We expect continued constructive regulatory outcomes throughout our forecast. In our discounted cash flow valuation, we use a 5.8% cost of capital based on a 7.5% cost of equity.

Read more about Alliant’s fair value estimate.

Risk and Uncertainty

Alliant’s ability to secure rate adjustments depends on maintaining constructive relations with regulators. If relations sour, regulators could cut the utility’s allowed return, resulting in earnings and cash flow pressure. Customer resistance to higher rates creates uncertainty surrounding Alliant’s growth. The company has a significant ongoing development program that is subject to potential cost overruns and political and regulatory risk. Alliant also faces the risk of an inflationary environment that raises borrowing costs and makes other investments more attractive for income-seeking investors.

Read more about Alliant’s risk and uncertainty.

Alliant Bulls Say

• Alliant’s earnings growth prospects are robust, based on regulatory support for renewable energy projects and economic development.
• Regulators in Iowa and Wisconsin are embracing renewable energy, providing additional growth opportunities with favorable ratemaking.
• The company operates in constructive jurisdictions that support returns and capital investments, including serving data centers’ energy needs.

Alliant Bears Say

• Alliant’s aggressive investment plan increases regulatory risk.
• If the economy slows in Alliant’s major markets—Iowa and Wisconsin—customer and load growth could slow.
• As with all regulated utilities, rising interest rates will raise financing costs and could make the dividend less attractive for income investors.

This article was compiled by Jess Bebel and Sylvia Hauser. Data as of Oct. 6, 2026, close unless otherwise noted.