Does AES's Renewables Surge and Q2 Loss Shift the Long-Term Growth Outlook for AES (AES)?

• The AES Corporation recently reported its second quarter 2025 results, highlighting a net loss of US$95 million despite generating US$2.86 billion in revenue and reaffirming its guidance and long-term growth targets.
• AES also announced a substantial 56% increase in renewables adjusted EBITDA and a strong 12-gigawatt backlog of signed power purchase agreements, supporting future project delivery and demand outlook.
• We'll explore how the demonstrated acceleration in renewables growth could influence AES's investment narrative and outlook for sustained expansion.

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AES Investment Narrative Recap

To own shares of AES, an investor needs to believe in the company's ability to convert a sizeable renewables project backlog and accelerating clean energy demand into meaningful long-term growth, despite short-term earnings volatility. The recent second-quarter net loss of US$95 million is not a material threat to its main short-term catalyst, which is robust renewables EBITDA growth; however, the biggest risk remains AES's exposure to potential shifts in U.S. renewable policy that could alter project economics and earnings predictability.

Among AES's latest announcements, the reported 56% increase in renewables adjusted EBITDA and its 12-gigawatt backlog of signed power purchase agreements stand out. These developments directly support the key catalyst of renewables-driven growth, reinforcing near-term project delivery and a strong demand outlook despite quarterly revenue fluctuations.

In contrast, investors should stay alert to how U.S. regulatory and policy uncertainties may impact AES's ability to...

Read the full narrative on AES (it's free!)

AES' outlook anticipates $12.3 billion in revenue and $1.7 billion in earnings by 2028. This scenario reflects a 0.6% annual decline in revenue and a $0.4 billion increase in earnings from the current $1.3 billion base.

Uncover how AES' forecasts yield a $13.92 fair value, a 4% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members shared 10 fair value estimates for AES, with views ranging from US$7.17 to US$20.65 per share. While perspectives vary, the company’s exposure to shifting U.S. renewable policy remains central to the debate about future profitability and project returns.

Explore 10 other fair value estimates on AES - why the stock might be worth 47% less than the current price!

Build Your Own AES Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your AES research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.
• Our free AES research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate AES' overall financial health at a glance.

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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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