Williams Company Inc. (NYSE: WMB) moved up a modest 1% after delivering mixed headline numbers in its Q1 2026 earnings report. The company delivered adjusted earnings per share (EPS) of 73 cents, easily beating expectations of 63 cents. However, revenue was a slight miss with Williams delivering $3.03 billion, below expectations of $3.28 billion.
Some context is required. For midstream infrastructure companies like Williams, revenue can be misleading due to commodity pass-through accounting. A more relevant metric of a company’s health is adjusted EBITDA. And that’s an area where Williams shone, reporting a record $2.25 billion.
The key takeaway from the report is that demand for natural gas far exceeds supply. The company cited research that natural gas demand will increase by 35% in the next decade. It’s a structural tailwind for WMB to move higher, even as it approaches its consensus price target and the top of its 52-week range.
Williams Doesn’t Directly Export LNG, But...
Natural gas companies are getting a tailwind from the supply disruptions in the Middle East, which are increasing demand for LNG from the United States. That's not going to impact Williams directly, as its transmission pipelines are confined to the continental United States.
But the company does have an acquired interest in Louisiana LNG. That gives the company fixed-fee revenue tied to that export market. Also, the company’s Transco pipeline corridor is a primary gas artery for Gulf Coast LNG facilities. This is a specific, concrete relationship that positions Williams to benefit from expanding Gulf Coast export capacity.
Data Centers Hold the Key to Long-Term Demand
The data center opportunity may be the most underappreciated element of the Williams growth story. The company is investing approximately $9.6 billion in behind-the-meter power projects. That means it is essentially building turnkey natural gas power plants directly connected to hyperscaler data centers, bypassing the traditional grid entirely.
The portfolio includes six named projects: Socrates, Apollo, Aquila, Socrates the Younger, Neo, and Atlas, with in-service dates ranging from late 2026 through 2028. Combined ISO capacity across these projects exceeds 2,500 megawatts, under agreements ranging from 10 to 12.5 years. Williams also has approximately 6 gigawatts of additional projects in its backlog.
The strategic logic is straightforward. Hyperscalers need power that is fast to deploy, always on, and independent of grid constraints. Renewables cannot currently meet that standard without massive battery storage infrastructure that doesn't yet exist at scale.
Williams is positioning itself as the answer to that gap. Instead of simply moving gas, this means Williams is embedding itself directly into customer infrastructure under long-term contracts.
The company’s backlog of approximately $15.5 billion between 2027 and 2033 accounts for about 18 months of current revenue. That’s a good reason to believe there’s a higher floor for WMB.
But how high is the ceiling? WMB is butting up to its consensus price target of roughly $79. Analysts have been slow to update their ratings and price targets since the report. However, since the company’s Q4 earnings report, a handful of firms have raised their price targets. The most bullish comes from Morgan Stanley (NYSE: MS), which raised its target to $90 from $83.
How Concerned Should Investors Be About the Debt?
The one area of the report that investors shouldn’t be too quick to dismiss is the company’s growing capital expenditures (CapEx). The new midpoint of $7.3 billion has pushed the company’s leverage to approximately 4.1x. That’s only a tick above the company’s target of between 3.5 to 4x.
In a vacuum, the number isn’t a concern. Williams has an investment-grade balance sheet and laddered maturity levels. However, in 2008, WMB was rocked after a credit shock hit the market, catching the company offside. While a credit shock of that magnitude seems unlikely, the risk of a mild credit shock is not zero.
That said, there's probably an appropriate level of concern to apply to the company's elevated debt level. It’s not zero, but it’s not a high-priority concern.
The heavy capital investment is front-loaded into the current calendar year. And on the earnings call, the company noted that the projects coming online in 2027 and 2028 will generate new EBITDA, helping reduce the leverage ratio before active debt paydown begins.
Maybe Not a Stock to Hold Forever, But a Strong Performer for Now
The continued buildout of renewable energy projects, specifically solar and battery storage, is a real threat to Williams. However, the threat is likely not a significant one to the business until 2035 or later.
At that point, battery storage at grid scale will become economically competitive with natural gas. It's also when the company’s current wave of LNG export contracts begins to roll off. Adding to the bear case is that the timeline also roughly coincides with the company’s longer-dated transmission contracts coming up for renewal.
These three headwinds converging around the same horizon are worth monitoring. If any one of them accelerates faster than expected, that 2035 timeline could compress. But what may happen in the future isn’t the same thing as what’s happening right now. For now, Williams looks like a solid choice for income and growth during this unprecedented period of natural gas demand.
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The article "How Williams Companies Is Cashing in on the AI Power Boom" first appeared on MarketBeat.
