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Russian (RU) Sultan Khalid
Mon, May 5, 2025, 7:57 AM 6 min read
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We recently published a list of the 10 Most Undervalued Energy Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Devon Energy Corporation (NYSE:DVN) stands against other undervalued energy stocks.
As of the close of May 2, 2025, the overall energy sector is undervalued by 13.1%, as compared to the general market’s undervaluation of 5.3%. The current downturn in the energy sector is primarily attributed to the current trade war sparked by President Trump’s tariffs and its resultant forecasted global economic slowdown. Moreover, global crude oil prices have plunged heavily since last month, with the West Texas Intermediate (WTI) crude price currently hovering around the $56 mark – a level it last hit during the Covid-19 pandemic in 2021.
READ ALSO: Top 15 Energy Companies With the Highest Upside Potential
Crude oil took a fresh hit this weekend after OPEC+ stunned the market by announcing a larger-than-expected output increase for June. This follows a similar surge announced for May and signals a sharp reversal from the group’s efforts to defend crude prices. It seems like Saudi Arabia has adopted a low-price strategy, aiming to discipline overproducing members like Kazakhstan and Iraq. This could also be a part of Riyadh’s efforts to build good relations with Donald Trump, who has recently been calling on the Kingdom to increase production in order to bring prices down. Given the high volatility in the market, it comes as no surprise that short-sellers marginally increased their bets against oil and gas stocks in March, with short interest in the energy sector reaching 2.58% compared to 2.52% in February.
That said, while oil may be presenting a bleak outlook, there are other sectors within the energy business that look very promising right now. A significant growth driver for the global energy industry is the ongoing AI boom and its accompanying power-hungry data centers. According to the International Energy Agency, the global electricity demand from data centers is set to more than double by 2030 to around 945 terawatt-hours (TWh), slightly more than the entire electricity consumption of Japan today. The rise of AI is also reshaping US power markets, as according to BNEF, the country’s data center demand is projected to rise from 3.5% of total electricity demand today to 8.6% by 2035.
Big Tech seems to have jumped headfirst into the AI boom, with commitments to invest hundreds of billions of dollars to build data centers and ensure their energy supply. In fact, this strategic move has injected new life into sectors such as nuclear, which has regained the spotlight after several tech giants met on the sidelines of the CERAWeek conference in March and signed a pledge to support the goal of at least tripling the world’s nuclear energy capacity by 2050.
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