TransAlta (TAC) remains positioned for a potential "upward inflection" in the coming quarters, though RBC Capital Markets said in a Thursday note the investment case is more of a longer-duration setup tied to Alberta grid tightening and data center-driven demand growth.

The firm said weaker-than-expected Q1 results do not change the broader thesis and highlighted potential data center load growth and improving project visibility in the province. RBC said TransAlta's reaffirmed 2026 guidance should provide investors "some comfort."

The company's investment thesis remains "robust" due to strong fleet availability, disciplined hedging and a supportive balance sheet. The brokerage described the setup as requiring patience and expects meaningful upside to emerge in 2028 and beyond as supply-demand dynamics tighten.

The firm highlighted that TransAlta's hedging strategy and asset optimization "generated realized prices about 45-50% above spot levels across its hydro and gas fleets." RBC said this underscores the value of its commercial and industrial book and active portfolio management.

RBC added that Alberta forward power prices are "not fully pricing in" potential data center-related demand growth. It said this demand could begin as early as 2027, though the more material impact is expected later in the decade as load growth scales.

The firm has an outperform rating on the stock, with a CA$24 price target.

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