Ormat Technologies (ORA): A High-Conviction Buy in the Energy Transition Era

The global energy transition is accelerating, driven by the urgent need to decarbonize power systems and meet surging demand from emerging technologies. At the intersection of this transformation lies Ormat Technologies (ORA), a leader in geothermal energy, which is uniquely positioned to capitalize on two megatrends: the untapped potential of geothermal power and the AI-driven explosion in energy demand. With favorable analyst upgrades, strategic partnerships, and a growing consensus on geothermal's role in the future energy mix, Ormat presents a compelling case for investors seeking exposure to the clean energy revolution.

Geothermal's Untapped Potential: A $9.12 Billion Growth Opportunity

The geothermal energy market is poised for exponential growth, with the global geothermal power sector projected to expand by USD 9.12 billion from 2024 to 2028, driven by government incentives and technological innovation. In the United States alone, the technical potential for Enhanced Geothermal Systems (EGS) exceeds 5,000 GW, more than four times the country's current electricity generation capacity. This represents a vast, underutilized resource that could provide stable, low-carbon baseload power-a critical need as the world transitions away from fossil fuels.

Despite its promise, geothermal energy remains a niche player in the renewables sector, accounting for less than 1% of global electricity generation. This underdevelopment is a structural opportunity for companies like Ormat, which has pioneered EGS technologies and operates one of the largest geothermal portfolios in the world. As governments and corporations prioritize energy security and decarbonization, geothermal's role is set to expand, creating a long-term tailwind for Ormat's growth.

AI-Driven Power Demand: A Tailwind for Geothermal's Strengths

The rise of artificial intelligence (AI) is reshaping energy demand, with data centers consuming an estimated 400 terawatt-hours annually-equivalent to the electricity used by the entire country of Argentina. These facilities require continuous, reliable power to operate, making geothermal energy an ideal solution. Unlike solar or wind, geothermal provides 24/7 baseload power with minimal land use and environmental impact, aligning perfectly with the needs of AI-driven infrastructure.

Tech giants are already investing in geothermal-powered data centers. For example, Google has partnered with Baseload Power in Taiwan to add 10 MW of geothermal energy to the grid by 2029, while Microsoft and G42 are developing a 1 GW geothermal-powered data center in Kenya. These projects underscore a growing recognition of geothermal's strategic value in the AI era.

Moreover, AI is enhancing geothermal efficiency. Machine learning algorithms are optimizing site selection, reducing drilling costs, and improving reservoir management. Ormat, with its deep expertise in geothermal engineering, is well-positioned to leverage these advancements and scale its operations in tandem with the AI revolution.

Ormat's Strategic Partnerships: Pioneering the Next-Generation Geothermal Era

Ormat has taken proactive steps to solidify its leadership in the geothermal space through cutting-edge partnerships. In 2025, the company partnered with SLB (Schlumberger) to co-develop Enhanced Geothermal Systems (EGS), with a pilot project aimed at validating commercial-scale deployment. This collaboration accelerates the commercialization of EGS, a technology that could unlock geothermal resources in non-traditional regions.

Additionally, Ormat signed a strategic agreement with Sage Geosystems Inc. to pilot Pressure Geothermal technology, which extracts energy from hot dry rock-a previously inaccessible resource-and develop energy storage projects using Sage's innovative methods. These partnerships highlight Ormat's commitment to innovation and its ability to adapt to the evolving energy landscape.

Analyst Upgrades and a Strong Buy Consensus

Analyst sentiment toward Ormat has turned decisively bullish in recent months. As of December 2025, the consensus rating among analysts is "Buy", with an average price target of $117.13, implying a 4.88% upside from current levels. Notably, UBS set a high of $135 in November 2025, while Piper Sandler raised its target to $125 in December 2025, reflecting an 11.42% upside.

The upgrades from top-tier firms like UBS, Barclays, and Piper Sandler underscore confidence in Ormat's ability to capitalize on geothermal's growth and AI-driven demand. Analysts highlight the company's technical expertise, diverse project pipeline, and strategic partnerships as key differentiators in a sector still in its early stages of adoption.

Conclusion: A High-Conviction Buy for the Energy Transition

Ormat Technologies is not just a beneficiary of the energy transition-it is a catalyst. By combining its geothermal expertise with AI-driven innovation and strategic partnerships, the company is addressing two of the most pressing challenges of the 21st century: decarbonization and energy reliability. With a $9.12 billion growth opportunity in the geothermal market, a $117.13 average price target from analysts, and a first-mover advantage in AI-powered geothermal systems, Ormat offers a rare combination of long-term vision and short-term momentum.

For investors seeking exposure to the energy transition, Ormat Technologies is a high-conviction buy-a company that is not only riding the wave of change but helping to define its direction.