Energy is front and center for investors right now, and not just because of a hot summer. A volatile mix of geopolitics, artificial intelligence’s thirst for power, and California’s fuel headaches has put the sector squarely in focus. According to CNBC’s latest Power Insider newsletter, hedge funds have been quietly building positions in some surprising names.
The most widely held energy stock among big hedge funds last quarter wasn’t an oil giant—it was pipeline player Williams (WMB). The newsletter speculates that funds are drawn to Williams’ push into AI and data centers, where it’s connecting natural gas directly to power sources. Chevron came in second, followed by Energy Transfer (ET), Devon Energy (DVN), Antero Resources (AR), and Expand Energy (EXE).
Some smaller names stand out too: Solaris Energy Infrastructure (SEI), ProPetro Holding (PUMP), Golar LNG (GLNG), and BKV Corporation (BKV). These stocks also carry notable analyst upside. Solaris, for instance, is 65% below its consensus price target of $95.52, and ProPetro sits 43% below its target. Both are involved in power generation—Solaris builds mobile electricity infrastructure for AI demand, while ProPetro pairs a big fracking business with power generation.
Europe’s energy woes are real but not the whole story
The newsletter, written from Colorado, paints a grim picture for Europe. The continent has been on edge since the Nord Stream pipeline sabotage in 2022, and it’s still unclear who was behind it. Europe has also made some questionable energy policy choices, shuttering nuclear plants and gas facilities, which has left it dependent on imports. Mild weather has offered some relief in recent years, but that luck may be running out.
This summer has been hot across Europe, and rising air conditioning use is draining natural gas storage. Germany’s storage levels are lower than last year and at the bottom of the rolling average, according to data from Germany’s Federal Network Agency. Add in Europe’s plan to phase out Russian LNG imports by fall next year—after record imports this year—and the uncertainty deepens.
That European demand would seem bullish for U.S. LNG exporters like Cheniere (LNG) and Venture Global (VG). But CNBC notes that market chatter suggests many cargoes are actually heading to Asia, where Qatari supply has been disrupted by Iranian attacks. So the bullish case is more complicated than it appears.
Diesel prices climb toward record territory
Back in the U.S., diesel prices are climbing. AAA reports the national average at $5.47 per gallon, closing in on the nominal record of $5.81 set in June 2022. Some cities are seeing far higher prices—parts of California are hitting $7 a gallon. Piper Sandler notes that diesel and jet fuel inventories fell by half a million barrels last week, when they’d normally be stable or rising ahead of fall. The Iran conflict and Russia’s war on Ukraine have taken a chunk of global refining capacity offline.
California’s pain is exacerbated by its own policies: the state has the highest gasoline taxes in the country, adding over 70 cents per gallon. But taxes aren’t the only culprit—the state has lost two big refineries in the last year and relies on imports, mostly by ship. That could change if a proposed pipeline called Western Gateway gets built. Phillips 66 (PSX), H.F. Sinclair (DINO), and Kinder Morgan (KMI) are behind the project, which would connect existing lines around Los Angeles and the Midwest. It could also help Arizona, which depends on California for much of its gasoline. Still, the pipeline won’t be finished before 2029 at the earliest, and California being California, nothing is certain.
AI and data centers are reshaping energy demand
Beyond geopolitics and fuel prices, AI’s power appetite is a recurring theme. Williams’ push into data centers is a prime example, and Targa Resources (TRGP)—also on the hedge fund list—recently announced a 20-year deal with ExxonMobil (XOM) to support Permian Basin growth. That deal adds new land to Targa’s holdings.
The newsletter also flags that nuclear stocks have had a rough quarter, with lower prices and valuations potentially drawing in buyers. And China is facing its own energy paradox: record renewable output is being curtailed because the grid can’t absorb it all.
For investors, the hedge fund list offers a window into where the smart money sees value in energy—and it’s not just the usual suspects. From pipeline infrastructure to power-focused fracking firms, the sector is being reshaped by forces far beyond the pump.
Source: www.cnbc.com — https://www.cnbc.com/2026/08/21/energy-sector-is-in-focus-because-of-iran-ai-and-california-here-are-hedge-funds-top-plays.html
This article is for informational purposes only and does not constitute financial, investment, tax, or legal advice. Do your own research and consult a licensed professional before making financial decisions.
