Renewable energy stocks are back in favor after a long slump, with new fund inflows and surging electricity demand from AI data centers and electrification sparking a powerful market rally.
The MSCI Global Alternative Energy Index jumped 17% last quarter, its best performance in nearly five years, while fund inflows reached their highest since 2022. “Even confirmation of bad news became a positive catalyst,” said BlackRock’s Alastair Bishop, pointing to renewed investor confidence.
The rebound follows years of underperformance, squeezed by higher interest rates and political uncertainty. Now, with U.S. power use projected to grow by 450 GW by 2030, and renewables offering the fastest build-out, companies from First Solar to EDP Renovaveis are seeing double-digit share gains.
Private equity is moving in too, with Global Infrastructure Partners eyeing a takeover of AES Corp, while fund managers like Guinness Asset Management are betting on grid and electrification plays such as Eaton and Prysmian.
At just 14.6 times forward earnings, renewables still trade well below global stock valuations, leaving significant upside potential as investors rotate back into the energy transition theme.
