TC Energy's Strategic Position in the AI-Driven Energy Infrastructure Boom: Why the “Hold” Rating Underestimates Long-Term Value

The energy sector is undergoing a seismic shift as artificial intelligence (AI) redefines global demand for clean, reliable power. At the forefront of this transformation is TC Energy (TRP), a Canadian energy infrastructure giant whose strategic investments in AI-aligned energy projects are positioning it to capitalize on the surging demand for natural gas and low-carbon solutions. Yet, despite its robust growth trajectory and alignment with the energy transition, the stock carries a “Hold” rating from analysts. This article argues that the “Hold” label fails to fully account for TC Energy's long-term value proposition in an AI-driven world, where energy infrastructure is becoming a critical enabler of technological progress.

The AI-Driven Energy Transition: A Catalyst for TC Energy

AI's exponential growth—particularly in data centers and cloud computing—has created a voracious appetite for energy. Natural gas, with its role as a transitional fuel and its ability to provide reliable baseload power, remains indispensable in this landscape. TC Energy's $900 million Northwoods expansion of the ANR pipeline system is a prime example of how the company is proactively addressing this demand. By adding 400 MMcf/d of capacity by 2029, the project directly supports the Midwest's AI data center boom, with 20-year contracts ensuring long-term cash flow visibility.

Beyond brownfield projects, TC Energy's $34 billion reinvestment plan through 2025 is heavily skewed toward energy transition initiatives. Over 60% of these funds are allocated to decarbonization efforts, including hydrogen infrastructure, nuclear energy (via Bruce Power), and electrification of operations. These projects align with global sustainability goals while addressing the energy needs of AI-driven industries, which require both scalability and reliability.

Why the “Hold” Rating Misses the Mark

Analysts' cautious stance on TC Energy stems from short-term concerns: a projected EBITDA CAGR of 5–7% between 2024–2027, a revised 2025 EPS estimate of $3.52, and worries about the pipeline business's long-term viability. However, these metrics overlook the structural tailwinds driving TC Energy's value.

1. Demand Resilience in Natural Gas:
   Natural gas remains a cornerstone of the energy transition, especially as AI infrastructure requires stable, dispatchable power. TC Energy's pipeline systems, including the Columbia Gas Transmission Pipeline, deliver 30% of North America's daily natural gas consumption. With Pennsylvania alone consuming 25% of its production, the company's infrastructure is deeply embedded in the continent's energy backbone.

2. AI-Integrated Infrastructure Efficiency:
   TC Energy is leveraging AI to optimize operations, from predictive maintenance to demand forecasting. These technologies reduce costs and enhance asset utilization, improving margins. For instance, Bruce Power's 99% availability rate underscores operational excellence, a critical factor in an era where reliability is paramount.

3. Strategic Debt Management and Dividend Resilience:
   TC Energy's debt-to-EBITDA ratio of 4.8 times (as of Q2 2025) is in line with its 4.75 target, reflecting disciplined balance sheet management. Meanwhile, its 5.4% dividend yield—supported by a payout ratio of 70–75% of free cash flow—provides income stability while retaining flexibility for reinvestment.

The Long-Term Play: Energy Transition and AI Synergy

The “Hold” rating underestimates how TC Energy's strategy aligns with the AI-driven energy transition. By 2030, the company's Multi-Year Growth Plan (MYGP) aims to add 1.0 Bcf/d of incremental throughput, supported by build multiples of 5–7 times. Projects like the Southeast Gateway pipeline and East Lateral XPress (ELXP) are designed to meet LNG export and industrial demand, ensuring cash flow resilience.

Moreover, TC Energy's partnerships with tech giants—such as its collaboration with Microsoft to develop 10.5 GW of renewables by 2030—highlight its role as a critical enabler of the AI revolution. These alliances position the company to benefit from the surging energy needs of hyperscalers while advancing decarbonization goals.

Investment Implications

For investors, TC Energy represents a rare hybrid: a utility with the infrastructure scale to support AI's energy demands and the financial discipline to sustain dividends. While the “Hold” rating reflects near-term caution, the company's long-term value is anchored in its ability to adapt to the energy transition. Key risks include regulatory shifts and the pace of decarbonization, but TC Energy's progress in reducing methane emissions (12% since 2019) and its diversified capital allocation strategy mitigate these concerns.

Conclusion

The “Hold” rating on TC Energy is a short-sighted assessment in the context of the AI-driven energy transition. As AI reshapes global energy demand, TC Energy's strategic investments in natural gas, hydrogen, and nuclear infrastructure—coupled with AI-powered operational efficiency—position it to outperform peers. For income-focused investors seeking exposure to the energy transition, TC Energy offers a compelling combination of dividend resilience and long-term growth potential. In an era where energy security is national security, TC Energy is not just a participant in the AI revolution—it is a foundational enabler.