Williams Companies (WMB): Evaluating Valuation After $3.1 Billion Power Expansion for AI-Driven Data Center Demand

Williams Companies (WMB) is making headlines after unveiling a $3.1 billion plan to boost its power generation capacity, in response to rising energy needs from data centers fueled by artificial intelligence growth.

See our latest analysis for Williams Companies.

Williams Companies’ bold $3.1 billion expansion move comes as their stock shows steady momentum, with the share price returning 11.6% year-to-date and a robust 23.4% total shareholder return over the last year. Five-year total shareholder return sits at an impressive 314.7%, reflecting real long-term growth potential and a market that is rewarding the company’s forward-thinking investments.

If infrastructure plays like Williams Companies have your attention, it could be the perfect time to broaden your lens and discover fast growing stocks with high insider ownership.

With shares trading just under analyst targets and the company posting double-digit profit growth, investors may ask whether Williams Companies is still undervalued or if the recent surge is simply the market pricing in this ambitious expansion.

Most Popular Narrative: 6.7% Undervalued

The narrative’s estimate of Williams Companies’ fair value stands above its last close, hinting at room for upside. This projection draws attention to how market optimism is translating into valuation and raises the stakes for future performance.

Large-scale expansions of Williams' pipeline network, particularly in high-growth regions like the Haynesville, Gulf Coast, and Transco corridor, are underway or recently placed in service to meet surging power, LNG export, and data center demand. This indicates significant volume and revenue growth is expected to accelerate in 2025 and beyond.

Read the complete narrative.

Curious why this narrative places such a premium on long-term earnings? The answer hides in ambitious growth assumptions and a profit expansion trajectory rarely seen in the sector. What’s fueling these bold projections, and how does it all add up to the current fair value? Find out what could be shifting the numbers behind the headline estimate.

Result: Fair Value of $66.85 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing regulatory hurdles and delays in major project permitting could threaten the anticipated growth story for Williams Companies in the coming years.

Find out about the key risks to this Williams Companies narrative.

Another View: Risk in the Multiples

While discounted cash flow analysis suggests Williams Companies may be undervalued, its price-to-earnings ratio stands at 31.4x. This figure is much higher than both the US Oil and Gas industry average of 12.8x and its peers at 14.7x. Even when compared to the fair ratio of 20.6x, the current valuation appears expensive. Does this premium indicate growth that investors should consider paying for, or is it a sign of stretched expectations?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Williams Companies Narrative

Want to dig into the details yourself? If these numbers don’t tell your story, shaping your own Williams Companies outlook is fast, simple, and takes just minutes. Do it your way.

A great starting point for your Williams Companies research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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