Scottish Mortgage Investment Trust started buying SpaceX stock years ago when the rocket maker was still very much private. Last we heard, its original $200m stake had ballooned to around $5bn!
Clearly then, the trust’s managers know how to spot a growth opportunity. So I was interested to see that Scottish Mortgage has recently bought a share that’s down 31% in a year. Let’s zoom in to see why…
Surging demand
The stock in question is Vistra Corp (NYSE:VST). It’s up more than 650% over the past five years, even after dropping almost a third since September 2025.
Now, at first glance, this isn’t your usual Scottish Mortgage tech pick because the company is an energy producer. Indeed, Vistra is one of America’s largest competitive power generators, with assets spanning gas, nuclear, and renewables.
So what gives?
It’s down to the AI boom, of course. Specifically, the surging electricity demand that the technology is creating, which is forcing hyperscalers to rush to secure energy for their power-hungry data centres.
New power stations, grid connections and pipelines can take years to build and approve. Power is becoming a critical constraint…When technological progress creates demand for a scarce input, we look beyond the most visible winners to those supplying it.
Scottish Mortgage.
Why Vistra?
Unsurprisingly, the company’s recent second quarter showed that growth is very strong right now. Adjusted EBITDA from ongoing operations jumped 31% to $1.77bn, with contributions from both its generation and retail segments.
For the full year, Vistra expects adjusted EBITDA between $6.8bn and $7.6bn. That would represent solid growth of about 24% at the midpoint, though after a strong start to 2026 management is now confident of hitting at least $7.2bn.
In June, it was announced that the firm will commit up to $1bn to Helix Digital Infrastructure. This is an end-to-end AI infrastructure company launched with KKR, Nvidia and Kuwait’s sovereign wealth fund. Vistra will be the preferred power provider, of course.
As well as this, the company has signed 20-year power purchase agreements with both Meta and Amazon Web Services (AWS). These nuclear deals are to provide almost 4,000 megawatts of zero-carbon energy.
Needless to say, these contracts appear to provide an incredibly rare level of long-term cash flow visibility. Meta’s due to start taking power later this year, followed by AWS in 2027.
What about valuation?
As mentioned, the share price is down 31% from highs reached last year when energy stocks went bananas. This leaves Vistra looking pretty cheap, at 13.3 times next year’s projected earnings.
However, some investors are understandably cautious due to the ongoing backlash around massive data centre deals. Texas, where Vistra is based and has a huge presence, recently hit the pause button on new data centre grid connections.
So there could be delays in recognising revenue. Moreover, if regulators reform electricity tariffs, the economics might not seem so attractive.
Despite this uncertainty, the long-term growth outlook appears attractive to me. Beyond AI, Vistra is also seeing rising electricity demand from EV charging, population growth, and the reshoring of industries to the US.
For those looking for a cheap way to invest in the AI energy boom, I reckon Vistra is well worth checking out after that 31% markdown.
Should you invest £5,000 in Vistra right now?
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Ben McPoland owns shares in Nvidia and Scottish Mortgage.
This story originally appeared on Motley Fool
