Summary

• Pinnacle West is upgraded from sell to hold as shares approach fair value after a strong technical breakout and solid Q1 results.
• PNW delivered Q1 GAAP EPS of $0.27 and revenue of $1.15B, beating expectations, with robust 9.4% retail sales growth driven by 14.6% C&I demand.
• Management reaffirmed FY 2026 EPS guidance of $4.55–$4.75 and targets 5–7% long-term EPS growth, supported by $10.4B capex through 2028.
• Key risks include higher interest rates, regulatory outcomes on the 2025 APS Rate Case, and operational challenges from surging AI-driven demand.

The utilities sector has lagged the broader market for the past year. Rising interest rates have, of course, been a headwind, but a long-term structural trend of increased electrification due to AI should not go ignored. Indeed, load-growth trends are

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