Workday's Decline Signals a Shift to AI-Driven Energy Infrastructure Plays

The software sector is facing a reckoning. Jim Cramer's recent warnings about Workday (WDAY)—a once-hot cloud-software leader—highlight a growing skepticism toward overvalued enterprise software stocks. Cramer's advice to “stay away” from Workday and its peers isn't just about one company's struggles; it's a signal to pivot toward sectors with tangible, scalable solutions for the AI era. Among the most overlooked opportunities: undervalued energy infrastructure stocks poised to profit from AI's voracious energy demands and Trump-era tariffs driving U.S. onshoring.

The Workday Dilemma: Overvalued Software vs. Underappreciated Infrastructure

Workday's troubles are emblematic of broader sector risks. Despite its “best-in-class” HCM software and AI integration, Workday faces intense competition from rivals like SAP and Oracle, regulatory headwinds, and inconsistent guidance. Cramer's “DON'T BUY” stance reflects investor fatigue with software stocks trading at premiums to their growth prospects.

Meanwhile, energy infrastructure firms—long dismissed as “old economy”—are emerging as critical “toll booth” operators for the AI revolution. These companies, from pipeline giants to nuclear innovators, are the unsung heroes of an energy-hungry future. Let's explore why:

Why AI Needs Energy Infrastructure—and Who's Positioned to Profit

AI's energy demands are staggering. A single large language model (LLM) can consume as much power as a small city, and data center energy use is projected to exceed Germany's total consumption by 2030. This creates a dual opportunity:
1. LNG and Natural Gas: Pipelines and LNG exporters like Energy Transfer LP (ET) and Entergy Corporation (ETR) supply the baseline energy for data centers and industrial reshoring.
2. Nuclear Power: Firms like Oklo Inc. (OKLO) and Entergy's nuclear assets provide 24/7 baseload power, indispensable for AI's round-the-clock processing.
3. Onshoring-Driven Buildout: Trump-era tariffs and Biden's “Buy American” policies are accelerating reshoring of manufacturing, requiring massive upgrades to energy grids and infrastructure.

Key Picks: Undervalued Infrastructure Stocks for the AI Era

1. Energy Transfer LP (ET): The LNG Toll Collector
- Why Buy? ET's $62 billion valuation hides its strategic dominance. Its 20,090-mile pipeline network supplies natural gas to data centers, refineries, and LNG export terminals like its Lake Charles facility (joint venture with MidOcean Energy). By 2026, this terminal alone could add $400M/year to EBITDA.
- Valuation Edge: Trading at 12x forward P/E (vs. a 15x five-year average) and offering a 7.2% dividend, ET is a buy below $18.50. Analysts see a 25% upside to $22.64.
- Trump-Biden Synergy: LNG exports to Europe and Asia (boosted by Trump's pro-energy policies) and Biden's climate agenda (which still relies on gas as a bridge fuel) make ET a bipartisan winner.

2. Entergy Corporation (ETR): Nuclear Power Meets LNG
- Nuclear's Role: Entergy operates four nuclear plants, including the Grand Gulf facility, which provides reliable baseload power for data centers. Its Delta Blues Advanced Power Station (online by 2026) will further boost industrial capacity.
- LNG Play: Entergy's 50% stake in the Lake Charles LNG terminal positions it to profit from U.S. LNG exports, which Goldman Sachs estimates will grow 140% by 2030.
- Valuation: Trading at 6.8x P/E (40% below peers), Entergy offers a 2.87% dividend and a potential 100%+ return over two years.

3. Oklo Inc. (OKLO): Tiny Reactors, Massive Upside
- SMR Innovation: Oklo's Aurora microreactor is a game-changer. These small modular reactors (SMRs) can be deployed near data centers, offering baseload power at 1/10th the cost of lithium-ion batteries.
- AI Partnerships: Microsoft and Alphabet have signed power purchase agreements, signaling Oklo's role in powering next-gen AI hubs.
- Valuation: Trading at 12x forward P/E (vs. overhyped AI stocks like Nebius Group at 132x), Oklo is a “hidden gem” with a $75 price target.

Cramer's Catalyst: Why Infrastructure Beats Software

Cramer's skepticism toward Workday isn't just about one stock—it's a vote of confidence in sectors with physical assets and recurring cash flows. While software stocks face cutthroat competition and margin pressures, infrastructure firms like ET, ETR, and OKLO benefit from:
- Toll-Booth Economics: Pipelines and nuclear plants generate steady fees, insulated from software's “winner-takes-all” dynamics.
- Regulatory Tailwinds: The Inflation Reduction Act and Biden's $369B CHIPS Act fund energy infrastructure, while Trump's tariffs accelerate reshoring (which boosts industrial energy demand).
- AI's Energy Dependency: Data centers can't run on code alone—they need reliable power.

Risks and How to Navigate Them

No investment is risk-free. Key concerns:
- Regulatory Delays: Projects like Energy Transfer's Mountain Draw pipeline face permitting hurdles.
- Commodity Volatility: Natural gas prices fell 10% YTD, but ET's fee-based model mitigates this risk.
- Execution Risks: Oklo's SMRs require flawless deployment.

Mitigation Strategy: Focus on companies with cash-heavy balance sheets (e.g., Entergy's $1.5B cash reserves) and diversified revenue streams (e.g., ET's LNG, pipelines, and renewables partnerships).

Investment Thesis: Pivot to the “Toll Booths” of the AI Era

Workday's decline isn't an isolated issue—it's a symptom of a broader software sector overhang. Investors should follow Cramer's lead and shift capital to infrastructure firms that are literally powering the AI revolution.

Actionable Picks (as of June 2025):
- Buy Energy Transfer (ET) at $18.50, targeting $23+ over 12–24 months.
- Entergy (ETR) at $70: A dividend play with 100%+ upside potential.
- Oklo (OKLO) at $62: A speculative bet on nuclear innovation, with a $75 price target.

Avoid overpaying for software stocks in a crowded space. The real growth lies in the energy “plumbing” that AI can't do without.

The AI revolution isn't just about algorithms—it's about the infrastructure that keeps them running. These undervalued energy plays are the unsung heroes of the next decade.