From Coal to Nuclear: Why U.S. Energy Could Be the Biggest Winner of the Decade

The U.S. energy sector has been volatile over the past year. After a strong run in 2022, energy cooled in 2023 and has delivered more modest gains since. As of mid-2025, the S&P 500 Energy sector was up about 4% year-to-date, despite wide swings in oil and gas prices. Oil spiked above $80 in January, plunged below $60 in spring, then rebounded, while natural gas has seesawed amid an oversupplied market.

This volatility masks a deeper story. Energy companies remain flush with cash, trading at relatively low valuations, and paying attractive dividends. More importantly, powerful new demand drivers are emerging—from AI’s soaring energy appetite to deregulation under the Trump administration—that suggest the sector could be entering a new growth cycle.

Catalysts Driving the Sector

AI’s Surging Energy Needs

Artificial intelligence is transforming industries, but it also consumes immense power. Running large language models and data centers requires staggering amounts of electricity. RAND projects U.S. AI data centers could add 327 gigawatts of demand by 2030—enough to power every home in the country. Tech giants like Microsoft and Google are already signing long-term power contracts, even considering bringing nuclear reactors like Three Mile Island back online.

This shift creates enormous opportunities for companies that can deliver reliable, scalable energy. Coal, nuclear, natural gas, and oil are all poised to benefit as AI’s growth collides with limited grid capacity.

Deregulation and Policy Tailwinds

The Trump administration has prioritized energy dominance. Policies include streamlined drilling permits, renewed pipeline approvals, relaxed environmental restrictions, and support for coal and nuclear plants. This environment reduces compliance costs, extends the life of traditional energy assets, and encourages new investment.

Coal plants once slated for retirement are being kept online, while nuclear is receiving bipartisan backing as a carbon-free, 24/7 baseload source. Combined with pro-drilling measures, this policy mix favors traditional energy companies.

Financial Strength

After years of elevated commodity prices, many energy firms hold record cash balances, strong free cash flow, and relatively low debt. Valuations remain appealing: some coal and gas names trade at 5–6× earnings with high cash returns. The sector also pays a dividend yield (~3.3%) well above the S&P 500’s 1.3%.

In short, low valuations, strong earnings, and new demand drivers create a favorable setup.

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Five Stock Ideas

Exxon Mobil (XOM) – Integrated Supermajor Leveraging Technology

Exxon Mobil is the largest U.S. oil and gas company, producing more than 4 million barrels of oil equivalent per day. The stock has delivered steady gains, up double digits over the past year, supported by $7 billion+ quarterly earnings and a 3.5% dividend yield.

Why it stands out: Exxon is applying AI and advanced drilling technologies in the Permian Basin, boosting output efficiency and recovery rates. Management has said “peak Permian” is not in sight, and production hit record levels in 2025. With deregulation favoring new drilling and AI driving demand for natural gas, Exxon combines scale, innovation, and shareholder returns in one package.

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SLB (SLB) – Oilfield Services with an AI Edge

SLB (formerly Schlumberger) is the world’s largest oilfield services provider. Its fortunes rise with drilling activity, and recent quarters have shown improved profitability. Shares are trading in the low-$30s, below pre-pandemic highs but backed by strong global demand.

Why it stands out: SLB is pioneering AI-driven drilling. In 2025, it won a major deepwater contract with Woodside Energy thanks to AI-enabled rigs that optimize drilling in real time. As deregulation spurs more exploration and offshore projects, SLB’s technology edge should drive earnings growth and market share. It’s a “picks and shovels” play on rising global energy demand.