Bank of America says the market's move away from technology and into energy has gained momentum, but that trend has largely skipped natural gas producers - a discrepancy the bank views as an investment opportunity.
Analyst Kalei Akamine told clients that "the rotation out of tech is accelerating in real time," noting that the S&P 500 Energy Index has outperformed the broader market. Yet, the bank added, "natural gas has been left behind," even though the supply-demand picture has meaningfully improved.
BofA emphasized weather impacts as an important factor. It said Winter Storm Fern tightened balances and pulled end-of-season storage estimates "toward ~1.6 tcf," a development the bank says supports expectations that second-quarter pricing could "firm toward $4.00/mmbtu."
The note also points out that 2026 supply "appears baked in," which the bank views as creating a more favorable setup for the following winter and potentially reopening the path to a 2026-27 price spike.
Perhaps most notable in BofA's analysis is the view that artificial intelligence investment - the same dynamic pressuring some technology shares - may boost gas consumption. As Akamine observed: "The irony of the current sell-off is hard to miss. AI-driven capex excesses pressuring tech equities are set to translate into durable power demand growth, directly benefiting U.S. gas producers."
Against that backdrop, the bank identified five preferred U.S. natural gas names:
- EQT (EQT) - Ranked by the bank as its top U.S. gas name, EQT is characterized by an integrated midstream, a deep inventory estimated at 30 years, a low cost structure, and "superior market access (exclusive data center supply)."
- Expand Energy (EXE) - BofA said EXE "stands out for execution in the Haynesville which is directly exposed to the LNG offtake story."
- Antero Resources (AR) - The bank noted Antero provides downside protection because HG Energy volumes are largely hedged at $4.00/mmbtu and the company offers a leading free cash flow yield.
- National Fuel Gas (NFG) - BofA described NFG as offering a "more defensive profile through its diversified model, strong hedges, and regulated utility cash flows."
- Gulfport (GPOR) - The bank highlighted GPOR's "debt adjusted FCF yield at 11%" and noted buybacks are funding per share growth.
BofA's note ties together short-term supply dynamics, weather-driven storage outcomes and a structural demand rationale linked to AI-related capital spending. Taken together, the bank argues these factors create a backdrop in which overlooked U.S. gas producers could outperform as markets reassess both demand and pricing power.
Summary - Bank of America sees a growing disconnect: investors are moving from tech to energy, yet natural gas producers have been left out. Weather-related tighter balances, lower storage estimates near ~1.6 tcf, and a forecast that Q2 prices could firm toward $4.00/mmbtu contribute to the bank's constructive view. BofA also cites AI-driven capex as a demand catalyst and highlights five preferred gas names with company-specific strengths.
Key points
- Investor rotation from technology into energy has accelerated, but natural gas producers have not participated in the rally.
- Weather events like Winter Storm Fern have tightened supply-demand balances, drawing end-of-season storage toward ~1.6 tcf and supporting potential Q2 price strength toward $4.00/mmbtu.
- AI-driven capital expenditure is expected by the bank to raise durable power demand, which would directly benefit U.S. gas producers; BofA names EQT, EXE, AR, NFG and GPOR as preferred stocks.
Risks and uncertainties
- Weather sensitivity - The outlook relies in part on weather-driven tightening from Winter Storm Fern; future weather developments could alter storage and price trajectories.
- Supply assumptions - BofA notes that 2026 supply "appears baked in," but if supply dynamics change, the anticipated setup for next winter and the possibility of a 2026-27 price spike could be affected.
- Demand realization - The thesis depends on AI-related capex translating into sustained power demand growth; if that demand does not materialize as expected, benefits to U.S. gas producers may be muted.