Ormat Technologies Valuation: Assessing the Impact of Surging AI-Driven Power Demand

The rapid buildout of AI data centers is fueling record electricity demand across the U.S., drawing attention to companies that can help address this challenge. Ormat Technologies, a leading geothermal energy provider, is considered well-positioned to meet these evolving power needs.

See our latest analysis for Ormat Technologies.

Ormat Technologies has been catching investor attention, with the stock’s momentum accelerating. Its 1-month share price return stands at 14.02%, adding to an impressive 52.55% gain year-to-date. Over the past year, the total shareholder return has reached 33.75%, reinforcing the idea that rising energy demand from AI adoption could give well-positioned players like Ormat even more room to run in the long term.

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With Ormat’s stock having rallied sharply, investors now face the key question. Is the company’s future growth already fully reflected in the share price, or does the current valuation still offer a window to buy in before the next leg up?

Most Popular Narrative: 7.5% Overvalued

Ormat Technologies is trading above the fair value estimate most widely followed by analysts, with a last close price of $105.46 compared to a narrative fair value of $98.10. This premium pricing suggests market confidence, but also places expectations high for future performance and policy-driven growth.

Recent federal permitting reforms and policy support have significantly expedited geothermal project development timelines in the U.S. This has enabled Ormat to accelerate greenfield expansion and release more projects for construction, likely driving faster revenue growth and increased long-term cash flows. Extension of production and investment tax credits (PTC/ITC) for geothermal and energy storage projects through at least 2033 reduces capital costs, de-risks new project development, and boosts net margins and earnings over the next decade.

Read the complete narrative.

Curious how bold growth assumptions and long-term margin bets are shaping this valuation? There is a surprising blend of federal incentives, future cash flow targets, and stretched profit multiples powering this narrative. Find out which projections truly move the needle.

Result: Fair Value of $98.10 (OVERVALUED)

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

However, operational issues in Ormat’s electricity segment or possible policy changes on tax credits could obstruct the company’s projected growth trajectory.

Find out about the key risks to this Ormat Technologies narrative.

Build Your Own Ormat Technologies Narrative

If you think there’s more to the story or want to interpret the numbers from your own perspective, you can easily build your own view in just a few minutes. Do it your way

A great starting point for your Ormat Technologies research is our analysis highlighting 1 key reward 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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