NextEra Energy's (NEE) all-stock merger with Dominion Energy (D) is expected to create a $400 billion enterprise value utility and energy infrastructure company uniquely positioned to capitalize on the massive power demands of data centers, Morgan Stanley said in a report Tuesday.

The deal offers "modest" near-term earnings "accretion" and supports projected long-term earnings per share growth of more than 9% through 2035, the firm said. NextEra shareholders will own roughly 74.5% of the combined company, the report noted.

The investment bank said the main driver of the deal is sheer "scale," which is becoming critical as data centers grow larger and supply chains tighten. The combined entity is expected to boast a pipeline of more than 130 gigawatts of "large-load customer" demand, according to the report.

Morgan Stanley maintained an overweight rating on NextEra Energy and raised its price target to $115 from $107, noting that the deal is expected to close within 12 to 18 months, pending federal and state regulatory approvals.

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