From Dull to Dynamic—Utilities Emerge as the New Champions of the AI Gold Rush

Utilities Sector Performance: The utilities sector has outperformed the S&P 500 in 2025, returning over 15% year-to-date, driven by both defensive appeal during market volatility and the growing demand for energy from AI data centers.

AI's Impact on Utilities: The surge in AI technology is significantly increasing electricity demand, with projections indicating that data center electricity use could more than double by 2030, creating new revenue opportunities for utilities through long-term contracts with major tech companies.

Investment Options: For investors, ETFs like the Utilities Select Sector SPDR (XLU) and Vanguard Utilities ETF (VPU) offer broad exposure to the utilities sector with attractive dividend yields, while individual stocks such as Entergy, DTE Energy, and Constellation Energy present specific growth opportunities linked to AI power needs.

Individual Stock Highlights: Entergy and DTE Energy are positioned well for growth due to their nuclear assets and contracts with hyperscalers, while Constellation Energy, as a major nuclear operator, has gained traction through partnerships with tech giants, despite its higher valuation and lower yield.