Midstream Companies are Critical Infrastructure to AI and Growth

The explosive growth of artificial intelligence is rewriting the rules of energy demand. Hyperscale data centers powering AI training and inference are projected to consume vast amounts of electricity—much of it reliably supplied by natural gas-fired generation. Yet the real enablers aren’t the chipmakers or the hyperscalers themselves. They are the midstream operators who own and operate the pipelines, processing plants, and gathering systems that deliver the molecules of natural gas to power plants and behind-the-meter generation facilities.

A recent Substack analysis highlighted this dynamic perfectly: a major U.S. midstream operator just revealed a $500 million step-up in 2026 organic growth capex explicitly tied to infrastructure for data centers and AI-driven power demand. The post argued that midstream isn’t riding an “AI tailwind”—it is the physical chokepoint on firm, unsubstitutable gas supply to the power stack.

That operator? Energy Transfer (ET), whose Q1 2026 earnings release and guidance update match the description to the letter. But ET is far from alone. Williams Companies (WMB) and ONEOK (OKE) are also aggressively positioning their vast natural gas and NGL networks to capture this secular shift. Here’s why investors should take a close look at these three midstream leaders.

Energy Transfer (ET): The $500 Million AI Bet and Record Volumes

Energy Transfer delivered a standout Q1 2026: Adjusted EBITDA of $4.94 billion (up 20% year-over-year), record NGL exports (+19%), fractionation (+11%), and crude transportation (+8%). Net income attributable to partners was $1.25 billion.

In response, management raised full-year 2026 Adjusted EBITDA guidance to $18.2–$18.6 billion (from $17.45–$17.85 billion) and organic growth capex to $5.5–$5.9 billion (from $5.0–$5.5 billion)—a roughly $500 million increase directly linked to new projects serving data centers and power generation.

Key AI/power projects highlighted:

Long-term firm transportation agreements to the Nexus Hubbard Campus (central Texas), a behind-the-meter AI hyperscale data center powered by on-site natural gas generation.

pipelines and meter stations delivering ~300 MMcf/d of natural gas to various power plants and data center sites in Oklahoma and Arkansas (four new loads already connected or coming online through 2028).

Springerville Lateral (120-mile, 30-inch pipeline off the Transwestern system, ~625 MMcf/d capacity) to replace coal-fired plants with natural gas—backed by 20-year contracts, in service Q4 2029.

Accelerated spend on the Desert Southwest expansion and Permian gathering/compression tied to acreage dedications.

With over 6 Bcf/d of recent long-term firm contracts adding tens of billions in visible revenue, ET’s fee-based, take-or-pay model provides durable cash flows and supports its 3–5% annual distribution growth target (current quarterly distribution raised to $0.3375/unit).

Investor takeaway: ET is the clearest pure-play on the “gas-to-AI” buildout, with the Substack-noted $500 million capex reveal confirming management’s conviction.

Williams Companies (WMB): Power Innovation Leader with Data-Center-Specific Deals

Williams posted record Q1 2026 results: Adjusted EBITDA of $2.254 billion (+13% YoY), GAAP net income of $864 million (+25%), and Adjusted EPS of $0.73. Cash flow metrics were equally strong, with AFFO up 22% and 2.76x dividend coverage.

Guidance remains robust—2026 Adjusted EBITDA of $8.05–$8.35 billion (pointing to the upper half)—while growth capex was hiked to $7.0–$7.6 billion to fund an expanding portfolio of “power innovation” projects. The dividend was raised 5% to $2.10 annualized.

AI and data-center highlights:

Neo — $2.3 billion behind-the-meter power project with 682 MW of installed capacity.

Atlas — natural gas infrastructure agreement providing up to 164 MMcf/d directly to a Northeast data center.

Socrates (and follow-ons like Apollo, Aquila, Socrates the Younger) — gas-fired power solutions for hyperscalers, including a Meta-backed facility targeting in-service in H2 2026.

Major Transco expansions: Power Express upsized to 750 MMcf/d, plus Northeast and Southeast Supply Enhancement projects now under construction.

~700 MMcf/d of new gathering expansions in Marcellus and Haynesville plus Silver Spur (275 MMcf/d on Northwest Pipeline).

Williams’ strategy—combining interstate transmission with on-site power generation—gives it a differentiated edge in serving data centers that cannot wait for grid interconnections.

Investor takeaway:

WMB offers the highest-visibility “gas-to-power” platform, with multi-year contracted backlog extending into the 2030s and strong dividend growth.ONEOK (OKE): Permian Powerhouse with Broad AI Tailwinds

ONEOK also delivered strong Q1 2026 results: net income of $776 million (+12%), Adjusted EBITDA of $2.0 billion (+13%), and volume growth across NGL raw feed (+15%), refined products (+12%), and natural gas processing (+5%).

Management raised 2026 guidance: net income to $3.21–$3.79 billion (midpoint $3.5 billion), Adjusted EBITDA to $8.0–$8.5 billion (midpoint $8.25 billion), and EPS midpoint of $5.53. Total capex remains disciplined at $2.7–$3.2 billion.

Positioning for AI/power demand:Footprint overlaps key data-center growth regions (Permian, Mid-Continent, Rockies) with ~30 potential power and data-center projects representing >4 Bcf/d of potential incremental demand.

Recent relocation of a 150 MMcf/d processing plant to the Permian, Delaware Basin expansions (+110 MMcf/d), Bighorn project (300 MMcf/d mid-2027), Powder River Cutter (60 MMcf/d Q4 2026), and Medford Fractionator rebuild.

Strong LNG export and NGL fractionation tailwinds that complement gas demand from power generation serving AI.

CEO Pierce Norton cited “a more constructive market environment” and “increased opportunities across our integrated asset portfolio” as drivers of the guidance raise—language that aligns with broader industry commentary on AI-driven power needs.

Investor takeaway: OKE provides diversified exposure (NGLs + natural gas) with lower capex intensity, and significant latent upside from power/data-center projects in its core basins.

Why Midstream Is “Critical Infrastructure” for the AI Era

Unlike hyperscalers or chip stocks, midstream assets are long-lived, contracted, and fee-based—delivering stable cash flows regardless of commodity price volatility. With grid interconnection queues stretching years and utilities turning to gas-fired generation (or behind-the-meter solutions), pipelines become the indispensable bridge. ET, WMB, and OKE are not just beneficiaries; they are building the physical backbone that enables AI growth.

All three trade at attractive valuations relative to their visible growth, offer high single-digit to low double-digit yields, and are executing on multi-year project backlogs. As AI buildout accelerates through 2027–2028, these midstream names stand out as the unsung heroes powering the next leg of U.S. economic growth.

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