Market Context: AI and Data Center Demand Reshape Power Landscape

The global electricity sector is undergoing a transformative period, largely driven by the explosive growth in demand stemming from artificial intelligence (AI) data centers, the reshoring of manufacturing, and the proliferation of electric vehicles. This surge is anticipated to nearly double global electricity demand by 2050, with data center power requirements alone projected to increase by as much as 165% by 2030. Such a fundamental shift necessitates substantial new generation capacity, positioning key players in the renewable energy sector for significant expansion.

Brookfield Renewable's Strategic Positioning and Operational Outlook

Brookfield Renewable Corporation (NYSE:BEPC) is strategically positioned to capitalize on this escalating demand. The company has actively expanded its portfolio through significant investments, including the acquisition of National Grid Renewables, adding 3.9 GW of operational and under-construction assets and over 30 GW of future development projects. Furthermore, Brookfield committed up to $1 billion to increase its equity interest in the Colombian hydroelectric producer Isagen to 38%. These strategic initiatives are projected to boost Brookfield's Funds From Operations (FFO) per share by approximately 2% in the coming year.

Operationally, the company reported a 10% increase in FFO during the second quarter of 2025 compared to the previous year, driven by robust performance in its hydroelectric and distributed energy businesses. Despite this operational strength, some analyst forecasts indicate that BEPC may face near-term net losses, with projections suggesting losses could balloon to US$1.07 per share in 2025. This contrasts with a broader outlook that anticipates a substantial 66% increase in earnings over the next few years, fueled by its long-term contracts with major hyperscalers such as Google and Microsoft.

Divergent Valuation Perspectives

BEPC shares currently trade at US$33.76, having moved between US$31.42 and US$36.95 recently. The market is grappling with differing perspectives on the company's intrinsic value. Simply Wall St's valuation model suggests the stock is fairly priced, trading approximately 13.17% above its intrinsic value of $29.83. Conversely, another prevailing narrative indicates that BEPC is 11.9% undervalued, with a fair value estimated at $39.25.

Analyst Commentary and Ratings

Brokerage firms offer varied but generally optimistic assessments. RBC Capital Markets has reiterated an "Outperform" rating on Brookfield Renewable (referring to BEP, a related entity, which often influences BEPC sentiment), citing "stronger than ever" growth visibility. However, their price target of US$31.00 sits below BEPC's current trading price. Similarly, Mizuho adjusted its price target for BEP to $27.00 from $26.00, maintaining a "Neutral" rating, following management's reaffirmation of a target exceeding 10% FFO per unit growth for 2025.

"Growth visibility for Brookfield Renewable Energy is stronger than ever."

  • Nelson Ng, Analyst, RBC Capital Markets

Looking Ahead: Navigating Growth and Profitability

The trajectory for Brookfield Renewable Corporation is intrinsically linked to the accelerating demand for clean energy solutions driven by technological advancements like AI. While the company demonstrates strong operational growth and strategic positioning with key hyperscalers, the near-term profitability forecasts and divergent valuation models introduce an element of cautious optimism. Investors will closely monitor BEPC's ability to translate its expanding asset base and FFO growth into sustained net earnings. Key factors to watch include the realization of its project pipeline, the continued securing of long-term contracts, and how effectively it navigates potential regulatory hurdles and project approval delays, which could impact its revenue growth outlook. The market will be seeking clearer signals on how the significant future earnings growth potential aligns with current financial performance and valuation. The company's substantial $4.7 billion liquidity reserve positions it to pursue further growth opportunities, particularly in battery technology and other renewable energy advancements.