This ETF Outperforms the S&P 500: A Straightforward Approach to Investing in AI and Earning Passive Income from High-Yield Stocks.
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 30 2025
0mins
Source: Fool
S&P 500 and Utility Sector Performance
- Current Market Status: The S&P 500 index is up 9.9% year-to-date, but the utility sector, represented by the Vanguard Utilities ETF (VPU), is outperforming it.
- Vanguard Utilities ETF Overview: The VPU offers a diversified investment in the U.S. utility sector, primarily in electric and multi-utilities, with a low expense ratio of 0.09% and a yield of 2.7%.
Sector Performance Insights
- Outperforming Sectors: In 2025, five sectors are expected to outperform the S&P 500: industrials, communication services, utilities, technology, and financials.
- Defensive Nature of Utilities: Typically, utilities are seen as defensive investments during market uncertainty, contrasting with the cyclical nature of sectors like industrials and financials.
Impact of AI and Energy Transition
- AI's Influence on Utilities: The utility sector is experiencing growth due to investments in AI and the energy transition, with major tech companies expanding cloud infrastructure.
- Electricity Demand Projections: The U.S. Energy Information Administration (EIA) forecasts a 2.2% annual increase in electricity sales for 2025 and 2026, driven by AI and data center growth.
Regional Demand Increases
- ERCOT and PJM Demand Growth: The EIA predicts a 7% increase in electricity demand in Texas (ERCOT) for 2025 and 14% for 2026, while PJM Interconnection is expected to see a 3% increase in 2025 and 4% in 2026.
- Utility Companies Benefiting: Utilities like Southern Company, Dominion Energy, and American Electric Power are positioned to benefit from these demand increases.
Renewable Energy Investments
- Infrastructure and Energy Mix: The buildout of infrastructure for data centers will require both renewable energy and fossil fuels, with utilities investing heavily in renewables to meet sustainability goals.
- Corporate Sustainability Goals: Companies like Amazon and Microsoft are making significant investments in renewable energy, with Amazon achieving 100% renewable electricity for its operations in 2023.
Investment Opportunities
- Indirect AI Investment: The Vanguard Utilities ETF presents a way for investors to gain exposure to AI-driven demand for energy without the volatility of high-growth stocks.
- Long-term Growth Potential: The steady increase in energy demand, coupled with AI's requirements for higher power capabilities, supports a positive investment thesis for the utility sector.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy ORCL?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on ORCL
Wall Street analysts forecast ORCL stock price to rise
34 Analyst Rating
25 Buy
9 Hold
0 Sell
Moderate Buy
Current: 188.330
Low
180.00
Averages
309.59
High
400.00
Current: 188.330
Low
180.00
Averages
309.59
High
400.00
About ORCL
Oracle Corporation offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud. The Company operates through three businesses: cloud and license, hardware and service. Its cloud and license business is engaged in the sale, marketing and delivery of its enterprise applications and infrastructure technologies through cloud and on-premise deployment models including its cloud services and license support offerings, and its cloud license and on-premise license offerings. Its hardware business provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments. Its services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Project Jupiter Expands Community Outreach Efforts
- Enhanced Community Engagement: Project Jupiter is directly interacting with residents through community open houses and door-to-door visits in New Mexico, aiming to address questions about the project's economic impact and community investments, thereby increasing local understanding and support for the initiative.
- Significant Economic Impact: The project is expected to create over 4,000 construction jobs and 1,500 ongoing project-supported jobs, generating approximately $384 million in economic impact annually during construction and $113 million annually once operational, significantly boosting the local economy.
- Strong Investment Commitment: Project Jupiter has committed $50 million to improve local water systems and $360 million in direct support for schools, infrastructure, and community services, along with $6.9 million for workforce development and habitat restoration, demonstrating a long-term commitment to the community.
- Innovative Energy Strategy: The updated power plan for the project significantly reduces water usage, with the cooling system and fuel cell solution not utilizing public drinking water, ensuring that residential electricity rates remain unaffected, reflecting a strong emphasis on sustainability.
See More
Market Volatility and Portfolio Performance Overview
- Market Volatility Overview: The S&P 500 experienced significant volatility over the past three weeks, recording its worst session in eight months on June 5, just after reaching record highs, indicating shifts in market sentiment and investor uncertainty.
- Portfolio Performance: Among 34 stocks, 19 have risen since the May meeting, with Arm's stock soaring 38.2% driven by strong AI demand and the release of a new Nvidia chip, highlighting the potential for a rebound in tech stocks.
- Bank Stocks Recovery: Wells Fargo's shares increased by 13.9%, reflecting the financial sector's status as the best-performing group in the S&P 500, although it remains down nearly 7% year-to-date, suggesting a cautious recovery amid potential earnings volatility.
- Underperforming Stocks: Amazon's stock fell 10.8%, primarily due to concerns over AI investments, despite securing a $17.5 billion loan for AI development, raising questions about its future financial health and investor confidence.
See More
Oracle's Earnings Highlight Strong AI Demand and Growth Potential for Nvidia
- Surge in Capital Expenditure: Oracle anticipates capital expenditures of $70 billion for fiscal 2027, with total spending projected between $90 billion and $95 billion, significantly exceeding the $56 billion spent in fiscal 2026, indicating a strong commitment to AI infrastructure investment that could drive rapid market growth.
- Robust GPU Demand: Oracle's latest earnings report reveals a global GPU utilization rate of 97.5% in data centers, highlighting sustained demand for GPUs in AI workloads, which bodes well for Nvidia, reinforcing its dominant market position.
- Optimistic Market Outlook: According to Gartner, global AI infrastructure spending is expected to soar to $1.36 trillion in 2023 and reach $1.75 trillion by 2027, indicating a sustained investment boom in the AI sector, from which Nvidia is poised to benefit significantly.
- Earnings Growth Projections: Nvidia is forecasted to achieve an 88% earnings growth in fiscal 2027, far surpassing the S&P 500's 23% growth, with an expected earnings per share of $12.73 for fiscal 2028, suggesting a potential stock price increase to $318 if valued at 25 times earnings, representing a 50% upside.
See More
Oracle Significantly Increases Capital Expenditure Amid High GPU Demand
- Strong GPU Demand: Oracle reported a global GPU utilization rate of 97.5% in data centers, indicating robust demand for GPUs to run AI workloads, which bodes well for Nvidia's future market outlook.
- Surge in Capital Expenditure: Oracle expects capital expenditures to reach $70 billion in fiscal 2027, with total capex projected between $90 billion and $95 billion, significantly higher than the $56 billion spent in fiscal 2026, reflecting a strong commitment to AI infrastructure investment.
- Expanding Market Potential: Oracle's remaining performance obligations surged from $138 billion a year ago to $638 billion, indicating that Nvidia's addressable market is rapidly expanding, presenting substantial growth opportunities ahead.
- Rising Earnings Expectations: Nvidia is forecasted to see an 88% increase in earnings for fiscal 2027, significantly outpacing the S&P 500's 23% growth, highlighting its leadership position in the AI chip market and strong profitability prospects.
See More
Carmax Earnings Beat Drives Stock Surge Over 3.5%
- Carmax Earnings Surprise: Carmax reported Q1 earnings of $1.31 per share, significantly exceeding analysts' expectations of $0.95, resulting in a stock price increase of over 3.5%, reflecting strong performance in the automotive retail sector.
- AST SpaceMobile Launch Success: AST SpaceMobile's stock jumped 6% after successfully launching three new satellites, which will enhance its cellular broadband network in space, thereby strengthening its competitive position in emerging markets.
- La-Z-Boy Sales Surge: La-Z-Boy's retail sales rose 11% year-over-year in Q4, leading to a 16% stock price increase, indicating strong consumer demand and solidifying its market position as earnings exceeded expectations.
- Lionsgate Stock Decline: Lionsgate shares fell over 5% after Netflix denied acquisition rumors, despite a nearly 14% rise earlier due to merger speculation, highlighting the market's sensitivity to M&A news.
See More
Oracle's AI Cloud Investment Sparks Market Concerns
- Financial Volatility: Following its recent earnings report, Oracle's stock plummeted as the market expressed concerns over high spending on AI cloud infrastructure, which may lead to lower margins; however, one analyst predicts a potential 120% upside if returns on this investment are realized.
- Surging Capital Expenditures: Oracle expects to invest between $90 billion and $95 billion in capital expenditures for fiscal 2027, despite facing a total debt of $130 billion and $56 billion in customer pre-payments, indicating an aggressive investment strategy in the AI sector.
- Revenue and Earnings Outlook: While Oracle anticipates a 34% revenue growth for fiscal 2027, the adjusted earnings per share are projected to grow only 18%, highlighting concerns that the lower margins in its AI cloud business may impact overall profitability.
- Market Competition Risks: Oracle's transition to cloud computing faces challenges, particularly from competitors like OpenAI; although management asserts the company retains unique value in the AI era, investors remain cautious about its ability to differentiate itself in a competitive landscape.
See More
Project Jupiter Expands Community Outreach Efforts
- Enhanced Community Engagement: Project Jupiter is directly interacting with residents through community open houses and door-to-door visits in New Mexico, aiming to address questions about the project's economic impact and community investments, thereby increasing local understanding and support for the initiative.
- Significant Economic Impact: The project is expected to create over 4,000 construction jobs and 1,500 ongoing project-supported jobs, generating approximately $384 million in economic impact annually during construction and $113 million annually once operational, significantly boosting the local economy.
- Strong Investment Commitment: Project Jupiter has committed $50 million to improve local water systems and $360 million in direct support for schools, infrastructure, and community services, along with $6.9 million for workforce development and habitat restoration, demonstrating a long-term commitment to the community.
- Innovative Energy Strategy: The updated power plan for the project significantly reduces water usage, with the cooling system and fuel cell solution not utilizing public drinking water, ensuring that residential electricity rates remain unaffected, reflecting a strong emphasis on sustainability.
See More
Market Volatility and Portfolio Performance Overview
- Market Volatility Overview: The S&P 500 experienced significant volatility over the past three weeks, recording its worst session in eight months on June 5, just after reaching record highs, indicating shifts in market sentiment and investor uncertainty.
- Portfolio Performance: Among 34 stocks, 19 have risen since the May meeting, with Arm's stock soaring 38.2% driven by strong AI demand and the release of a new Nvidia chip, highlighting the potential for a rebound in tech stocks.
- Bank Stocks Recovery: Wells Fargo's shares increased by 13.9%, reflecting the financial sector's status as the best-performing group in the S&P 500, although it remains down nearly 7% year-to-date, suggesting a cautious recovery amid potential earnings volatility.
- Underperforming Stocks: Amazon's stock fell 10.8%, primarily due to concerns over AI investments, despite securing a $17.5 billion loan for AI development, raising questions about its future financial health and investor confidence.
See More
Oracle's Earnings Highlight Strong AI Demand and Growth Potential for Nvidia
- Surge in Capital Expenditure: Oracle anticipates capital expenditures of $70 billion for fiscal 2027, with total spending projected between $90 billion and $95 billion, significantly exceeding the $56 billion spent in fiscal 2026, indicating a strong commitment to AI infrastructure investment that could drive rapid market growth.
- Robust GPU Demand: Oracle's latest earnings report reveals a global GPU utilization rate of 97.5% in data centers, highlighting sustained demand for GPUs in AI workloads, which bodes well for Nvidia, reinforcing its dominant market position.
- Optimistic Market Outlook: According to Gartner, global AI infrastructure spending is expected to soar to $1.36 trillion in 2023 and reach $1.75 trillion by 2027, indicating a sustained investment boom in the AI sector, from which Nvidia is poised to benefit significantly.
- Earnings Growth Projections: Nvidia is forecasted to achieve an 88% earnings growth in fiscal 2027, far surpassing the S&P 500's 23% growth, with an expected earnings per share of $12.73 for fiscal 2028, suggesting a potential stock price increase to $318 if valued at 25 times earnings, representing a 50% upside.
See More
Oracle Significantly Increases Capital Expenditure Amid High GPU Demand
- Strong GPU Demand: Oracle reported a global GPU utilization rate of 97.5% in data centers, indicating robust demand for GPUs to run AI workloads, which bodes well for Nvidia's future market outlook.
- Surge in Capital Expenditure: Oracle expects capital expenditures to reach $70 billion in fiscal 2027, with total capex projected between $90 billion and $95 billion, significantly higher than the $56 billion spent in fiscal 2026, reflecting a strong commitment to AI infrastructure investment.
- Expanding Market Potential: Oracle's remaining performance obligations surged from $138 billion a year ago to $638 billion, indicating that Nvidia's addressable market is rapidly expanding, presenting substantial growth opportunities ahead.
- Rising Earnings Expectations: Nvidia is forecasted to see an 88% increase in earnings for fiscal 2027, significantly outpacing the S&P 500's 23% growth, highlighting its leadership position in the AI chip market and strong profitability prospects.
See More
Carmax Earnings Beat Drives Stock Surge Over 3.5%
- Carmax Earnings Surprise: Carmax reported Q1 earnings of $1.31 per share, significantly exceeding analysts' expectations of $0.95, resulting in a stock price increase of over 3.5%, reflecting strong performance in the automotive retail sector.
- AST SpaceMobile Launch Success: AST SpaceMobile's stock jumped 6% after successfully launching three new satellites, which will enhance its cellular broadband network in space, thereby strengthening its competitive position in emerging markets.
- La-Z-Boy Sales Surge: La-Z-Boy's retail sales rose 11% year-over-year in Q4, leading to a 16% stock price increase, indicating strong consumer demand and solidifying its market position as earnings exceeded expectations.
- Lionsgate Stock Decline: Lionsgate shares fell over 5% after Netflix denied acquisition rumors, despite a nearly 14% rise earlier due to merger speculation, highlighting the market's sensitivity to M&A news.
See More
Oracle's AI Cloud Investment Sparks Market Concerns
- Financial Volatility: Following its recent earnings report, Oracle's stock plummeted as the market expressed concerns over high spending on AI cloud infrastructure, which may lead to lower margins; however, one analyst predicts a potential 120% upside if returns on this investment are realized.
- Surging Capital Expenditures: Oracle expects to invest between $90 billion and $95 billion in capital expenditures for fiscal 2027, despite facing a total debt of $130 billion and $56 billion in customer pre-payments, indicating an aggressive investment strategy in the AI sector.
- Revenue and Earnings Outlook: While Oracle anticipates a 34% revenue growth for fiscal 2027, the adjusted earnings per share are projected to grow only 18%, highlighting concerns that the lower margins in its AI cloud business may impact overall profitability.
- Market Competition Risks: Oracle's transition to cloud computing faces challenges, particularly from competitors like OpenAI; although management asserts the company retains unique value in the AI era, investors remain cautious about its ability to differentiate itself in a competitive landscape.
See More
