ASX investors probably aren't too used to the AGL Energy Ltd (ASX: AGL) share price being a blowout investment. For years, AGL was a poster child of a blue chip share gone off the rails. That's what happens when a stock goes from over $27 (in 2017 in AGL's case) to around $5 by late 2021.

Yep, across those four years, AGL investors lost an excruciating 80% of their capital investment. At the same time, the ASX energy generator and retailer was slashing its dividends heavily. So all in all, it was an awful time to own this ancient ASX stock.

And yet, AGL's performance over more recent times has been starkly different. Since bottoming out at that $5 mark back in late 2021, AGL shares have been steadily recovering. Over the past six months alone, AGL has gone from roughly $8.50 a share to the $11.84 we see today (at the time of writing). That's a gain worth 39.4%.

AGL share price up after bullish earnings

Of course, much of this gain can be attributed to AGL's full-year earnings report, which was dropped in mid-August. As we covered at the time, this earnings report delighted investors. It saw AGL post a statutory profit of $711 million, up from a loss of $1.3 billion over the 2023 financial year.

Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) shot up 63% to $2.22 billion, which helped AGL's underlying net profit after tax (NPAT) explode 189% higher to $812 million.

This all enabled AGL to declare a final dividend of 35 cents per share for 2024, which was a 52% boost from the same payment last year.

Understandably, investors loved what this earnings report contained. As of today's pricing, AGL shares have gained more than 9% ever since it became public.

But perhaps this isn't all that is driving AGL shares higher.

ASX expert says the best might be yet to come

A recent report from ASX fund manager Firetrail makes some additional, and interesting, insights.

Firetrail predicts that artificial intelligence (AI) is a long-term tailwind for electricity demand and by extension, the companies that provide it. That includes AGL, as well as its rival Origin Energy Ltd (ASX: ORG).

Firetrail argued that "AI is data intensive and will provide a longer term addition to power demand".

The fundie noted that "surprisingly, demand for electricity is already rising" amid the expansion of AI technology. Firetrail pointed to data showing that monthly electricity demand in the United States is 4% higher than where it was this time in 2023. Here's some more of what was said:

The higher demand experience is being mirrored for AGL / Origin in Australia.

Feedback from companies is that efficiency efforts such as LED lighting have largely run their course and now there are more devices (iPads, smart devices etc) in the home leading to more demand for electricity.

Industrial electricity demand is also creeping up slowly as companies seek to decarbonise away from direct coal and gas burning towards electricity.

If AGL, and Origin by extension, can walk the tightrope of transitioning away from fossil fuels as well as catering for higher energy demands, it could indicate that both companies might enjoy a very long tailwind indeed. But, as always, we'll have to see if Firetrail is on the money here.