Energy Transfer (ET) LEAP Investment Analysis: Data Center Growth Thesis

This analysis is based on a Reddit post [Event Source] published on November 12, 2025, where an investor detailed selling Amazon LEAPs for approximately $38,000 in gains and reallocating to Energy Transfer (ET) LEAPs based on a comprehensive investment thesis centered on data center-driven natural gas demand growth.

ET closed at $16.58 on November 12, 2025, showing recent underperformance with a -15.88% year-to-date return despite strong long-term performance (+212.83% over 5 years) [0]. The stock presents attractive valuation metrics with a P/E ratio of 13.36x and P/B ratio of 1.33x, supported by solid profitability indicators including 11.20% ROE and 5.66% net profit margin [0].

The investment thesis is supported by concrete developments in ET’s data center strategy:

• A significant 20-year natural gas firm transportation agreement with Entergy Louisiana, initially providing 250,000 MMBtu per day starting February 2028, specifically to support “Meta’s new hyperscale data center in Richland Parish” [2]
• Oracle partnership to supply approximately 900,000 Mcf/d of natural gas to three U.S. data centers, with first flows expected by year-end 2025 [3]
• Strategic infrastructure expansion including the Hugh Brinson Pipeline and Transwestern Pipeline expansion to enhance “last mile” delivery capabilities for data centers and AI growth [3]

The AI data center market is projected to grow from $236.44 billion in 2025 to $933.76 billion by 2030, representing a 31.6% CAGR [3]. ET has secured exclusivity agreements representing over 1 billion cubic feet per day of potential data center demand [3]. Analyst sentiment remains strongly positive with 87.1% of analysts rating ET as “Buy” and a consensus price target of $20.00, representing 20.6% upside potential [0].

ET’s focus on natural gas transportation for data centers represents a strategic pivot that leverages existing infrastructure while targeting the rapidly growing AI sector. With natural gas expected to fire approximately 40% of U.S. electricity generated in 2025-2026 [3], ET’s midstream position provides essential infrastructure support for the energy-intensive data center expansion.

The Reddit investor’s choice of LEAPs (Long-term Equity Anticipation Securities) indicates high conviction but also introduces significant leverage risk. While the fundamental thesis appears sound, LEAP options carry substantial time decay risk and require the underlying stock to perform within a specific timeframe to be profitable.

ET’s early mover advantage in securing long-term data center agreements, such as the Meta partnership through Entergy Louisiana [2], provides a competitive moat. The company’s existing pipeline infrastructure and “last mile” capabilities position it favorably against peers who may need to build similar capabilities from scratch.

• Lake Charles LNG Project Uncertainty:
  ET will only proceed with Final Investment Decision after securing buyers for 80% of equity, potentially delaying a significant growth driver [4]
• LEAP Time Decay Risk:
  Long-dated options require timely stock appreciation to overcome premium decay
• Q3 2025 Performance Weakness:
  Recent earnings showed year-over-year revenue declines [1]
• Natural Gas Price Volatility:
  Transportation margins could be affected by gas price fluctuations

• Data Center Expansion Pipeline:
  Multiple ongoing negotiations could add to the existing 1+ Bcf/d of secured demand [3]
• Infrastructure Development:
  Pipeline expansions could unlock additional revenue streams
• AI Growth Momentum:
  Continued acceleration in AI adoption could drive faster-than-expected data center construction
• Valuation Recovery:
  Current underperformance relative to fundamentals suggests potential for mean reversion

The analysis reveals several risk factors that warrant attention, particularly regarding the leveraged nature of LEAP options and project execution uncertainties. While the data center thesis appears fundamentally sound, investors should be aware that the 20.6% analyst upside target [0] may not be sufficient to justify the risk of long-dated options, especially given ET’s recent underperformance and conditional LNG project timeline.

The Reddit investor’s pivot to ET LEAPs is supported by concrete business developments, particularly the 20-year agreement with Entergy Louisiana for Meta’s data center [2] and Oracle partnership [3]. The company’s strategic focus on data center natural gas supply aligns with the projected 31.6% CAGR in the AI data center market through 2030 [3].

ET maintains strong financial metrics with a current ratio of 1.41 indicating solid liquidity [0]. The overwhelming analyst support (87.1% Buy ratings) with a $20 consensus price target [0] provides institutional validation of the investment thesis, though recent stock performance suggests market skepticism.

• Q4 2025 earnings for updates on data center partnerships and LNG project progress
• Natural gas price trends and their impact on transportation margins
• Additional data center announcements from major tech companies
• Regulatory developments affecting pipeline operations and energy policy

ET’s transformation from a traditional midstream company to a key enabler of AI infrastructure represents a significant strategic evolution. The company’s ability to leverage existing pipeline assets for the data center market could create a sustainable competitive advantage in the rapidly expanding AI ecosystem.