Data centers boom revives renewable energy stocks

The election of Donald Trump as US President did not bode well for renewable energy companies in 2025. On assuming office he rescinded executive orders that reward the industry, has pushed a series of moves against what he called “the new green scam.”

A few months later, the market declared the death of the green energy sector. “The whole sector – solar, wind, hydrogen – everything ‘clean’ is dead now,” said a Bloomberg headline quoting Nishant Gupta, founder and chief investment officer of Kanou Capital. His hedge fund had been founded just a year earlier and was solely focused on investing in renewable energy, but by early 2025 he had discovered, in his words “the fundamentals were miserable.”

Looking like another passing trend

From September 2024 to April 2025, the S&P Renewable Energy Index plunged 25% and the market declared the “bursting of the green bubble.” The green crisis was also felt in Israel. Since Trump entered the White House and until April 2025, the Tel Aviv Cleantech Index fell 20%, in contrast to the rises of the Tel Aviv Stock Exchange’s (TASE) other indices. Green energy stocks looked like another trend that had faded, like cannabis stocks.

Israel’s renewable energy companies flourished during the Covid pandemic when a wave of IPOs by companies in the field flooded the TASE. The two stock exchange “pioneers”, Enlight and Energix, were joined by a number of other prominent companies in the industry, including Nofar, Doral and Meshek Energy. In those days of zero interest rates, the green energy sector emerged as the “next thing”, one that was expected to take the world, or at least the Israel economy, by storm, and in September 2020, the TASE Cleantech Index was launched.

Then in 2023, the markets changed, interest rates rose to new highs, and the Russia-Ukraine war exposed the dependence on traditional energies. The sky darkened over the industry, a number of small and medium-sized private companies filed court applications for protection from creditors due to heavy debts, and the TASE the industry index plunged to its lowest point, losing 60% of its value. Trump’s election looked like the final nail in the industry’s coffin.

The index that crashed is soaring

Then against all odds, renewable energy stocks began to soar and in recent months they have become one of the hottest trends on the TASE. The Cleantech Index has recovered more than 62% since the low of April 2025 and jumped almost 100% since the low of 2023. Some of the most prominent stocks in it, such as Doral and Meshek Energy, are showing triple-digit returns since the start of 2025.

Trump, it turns out, has also been convinced of the necessity of green energy. The demand for energy for data centers and the AI revolution is so great that the US President postponed the cancellation of tax breaks until the end of 2030. This is what happens when the choice is between staying behind in the great tech race of the 21st century and encouraging the oil and coal industry. Add to this a dramatic drop in the prices of inputs such as solar panels, lithium batteries and storage facilities, and the drop in interest rates in both Israel and the US and the stage was set for a renewed boost for the industry’s shares.

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In mid-2025, even before the industry recovered, Doral’s newl CEO Yoni Hantis told “Globes,” “Demand for electricity in the US is at its peak, and the most efficient, fastest and cleanest way to meet it is to massively build renewable energy facilities. The economic characteristics of the sector are what create, above all else, the market and economic equilibrium that makes renewable energy the right, cheapest and most profitable alternative for the US economy, and constitute a solid foundation for the continued growth of the global energy market, in any regulatory scenario.”

Tech giants are getting ready

Tech giants are also entering the field, and almost every one of them has an agreement with a renewable energy producer (in addition to traditional ones) to ensure the supply of electricity to their data centers. Google reported last week that it had acquired Intersect Power for $4.5 billion in cash, in addition to taking on an undisclosed amount of debt. Intersect, which builds data centers and energy infrastructure, has a backlog of projects that are estimated to reach a supply of 10.8 gigawatts by 2028 (before the tax breaks go into effect).

In June, it was Meta signed four agreements with Invenergy (a clean energy development company) to supply solar and wind energy to support the expansion of data center activity in the US.

Demand in the US market, where several prominent Israeli companies operate, including renewable producers Enlight, Energix and Doral, is skyrocketing. In fact, the cancellation of the tax breaks has ironically created a positive effect for them: Renewable energy companies have begun competing to see who can complete the most projects before 2029, to win tax breaks on existing projects just before they are canceled. Companies that were in a strong position to do so have benefited greatly.

The five best stocks

In terms of the backlog ahead, Israeli companies are on track to become major players in the US market. IBI renewable energy analyst Roy Shavit said, “2025 will be remembered as the year of the sector’s disengagement. The moment when energy and renewable stocks stopped trading inversely correlated with interest rates and began trading in direct correlation with AI demand. If the previous year was characterized by negative pressure on stocks despite record regulations, 2025 provided investors with a major upward correction. Israeli companies have shown impressive outperformance compared with the market.”

Among the companies in the industry in Israel, the record-breaking returns are those exposed to the US market. The energy sector has jumped by more than 200% since the start of 2025 (even though it also deals in traditional energy), Doral jumped almost 170%, OPC almost 150%, Enlight almost 130%, and Tralight, the subsidiary of Menora Mivtachim, jumped about 90%. The Cleantech Index has risen 33% since the start of the year, but since April, it has jumped 62%, compared with about 56% in the TA 35 Index. The Energy Infrastructure Index, the long-standing way for investors to gain exposure to stocks in the sector, 53% of which are cleantech and renewable energy stocks (and the rest from traditional industries), has jumped almost 80% since the beginning of 2025 and close to 90% since the April low.

Is the green revolution here to stay?

So is the green energy revolution here to stay this time? According to Morgan Stanley, at the very least, this will be a trend that will strengthen in 2026. In a review published by the investment bank last week, analysts wrote that fundamental demand for the sector is expected to recover in the new year. This is due to the increase in demand for electricity, especially from data centers, which are expected to be the main growth engine of the sector.

Morgan Stanley believes that electricity consumption in the US will grow about 3% per year through the end of the decade. “Renewable energy remains economically attractive, and companies in the sector are nodding to hypercycle companies (tech giants) seeking to limit carbon emissions as data center power consumption rises.” This time, it’s not the green dream that’s driving stocks, but the race for electricity that can be produced as quickly as possible.

Published by Globes, Israel business news – en.globes.co.il – on December 28, 2025.

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