Utility Stocks as a Hedge Against Geopolitical Risks and AI Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Source: CNBC
- Defensive Investment Strategy: Wells Fargo analysts highlight that utility stocks like American Water Works and Exelon can serve as strong defensive plays amid escalating market volatility due to the U.S.-Iran conflict, with expectations of continued relative outperformance in both down and up markets.
- Historical Performance Advantage: The utilities sector has historically outperformed the S&P 500 by approximately 780 basis points during global conflicts and recessions, indicating its stability and risk mitigation capabilities during uncertain times, a trend expected to persist amid the current conflict in Iran.
- AI Demand Driving Growth: With a surge in data center construction, utility companies like American Water Works are poised to benefit as they provide essential water resources for AI facility operations, with the stock rising about 8% over the past month and a current dividend yield of 2.4%.
- Exelon's Growth Potential: Exelon's business structure allows it to complete reliability upgrades in the coming years, with load growth expected to reach 3.3% from 2026 to 2029, while its stock has jumped 10% in the past month, currently yielding 3.5% in dividends.
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Analyst Views on EXC
Wall Street analysts forecast EXC stock price to rise
15 Analyst Rating
7 Buy
6 Hold
2 Sell
Moderate Buy
Current: 48.770
Low
39.00
Averages
49.46
High
57.00
Current: 48.770
Low
39.00
Averages
49.46
High
57.00
About EXC
Exelon Corporation is a utility services holding company engaged in the energy transmission and distribution businesses through its subsidiaries, Commonwealth Edison Company (ComEd), PECO Energy Company (PECO), Baltimore Gas and Electric Company (BGE), Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL) and Atlantic City Electric Company (ACE). Its segments include ComEd, PECO, BGE, Pepco, DPL and ACE. ComEd segment is engaged in purchasing and regulating the retail sale of electricity. PECO segment is engaged in purchasing and regulating the retail sale of electricity and natural gas. Through its business services subsidiary, Exelon Business Services Company, LLC (BSC), it provides its subsidiaries with a variety of support services at cost, including legal, human resources, finance, information technology and supply management services. BGE segment is focused on transmission and distribution of electricity and distribution of natural gas to retail customers.
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.
Utility Stocks as a Hedge Against Geopolitical Risks and AI Growth
- Defensive Investment Strategy: Wells Fargo analysts highlight that utility stocks like American Water Works and Exelon can serve as strong defensive plays amid escalating market volatility due to the U.S.-Iran conflict, with expectations of continued relative outperformance in both down and up markets.
- Historical Performance Advantage: The utilities sector has historically outperformed the S&P 500 by approximately 780 basis points during global conflicts and recessions, indicating its stability and risk mitigation capabilities during uncertain times, a trend expected to persist amid the current conflict in Iran.
- AI Demand Driving Growth: With a surge in data center construction, utility companies like American Water Works are poised to benefit as they provide essential water resources for AI facility operations, with the stock rising about 8% over the past month and a current dividend yield of 2.4%.
- Exelon's Growth Potential: Exelon's business structure allows it to complete reliability upgrades in the coming years, with load growth expected to reach 3.3% from 2026 to 2029, while its stock has jumped 10% in the past month, currently yielding 3.5% in dividends.
See More
Trump Pushes Tech Firms for Self-Powered AI Data Centers
- Self-Power Commitment: Trump is set to sign an agreement with major tech firms like Amazon, Google, and Meta, mandating them to supply their own power for AI data centers, addressing rising public anger over electricity prices, although the specifics of the commitment remain unclear.
- Rising Electricity Pressure: Average residential electricity prices in the U.S. increased by 6% in 2025, contrasting Trump's promise to halve prices during his term, highlighting the government's challenges in controlling energy costs, which could impact his support in the midterm elections.
- Implementation Challenges: The decentralized nature of electric grid regulations across states poses significant hurdles for the Trump administration in converting the pledge into actionable policy, with experts indicating that new federal legislation is necessary to address power supply shortages.
- Increased Political Pressure: Trump is leveraging his political influence to pressure tech companies into absorbing the costs associated with their data centers, despite the complexities arising from state-level regulation of power generation, which may complicate policy implementation.
See More
Trump Pushes Energy Commitment from Data Centers
- Political Commitment: In his State of the Union address, Trump mentioned securing a pledge from major tech companies to supply power for data centers, although details remain unclear, this could impact future electricity supply and cost structures.
- Growing Power Demand: NextEra Energy plans to build 15 gigawatts of new power capacity to meet data center demands, indicating a shift towards gas generation while emphasizing renewable energy, reflecting changing policy directions.
- Market Dynamics: With accelerated data center construction, the U.S. is expected to face a net negative power supply by 2029, tightening the electricity market and boosting market share for independent power producers.
- Investment Opportunities: Wells Fargo has named Constellation Energy as its top pick among independent power producers, projecting a 40% stock price increase, while other independent producers like NRG and Talen are also viewed positively, indicating optimistic sentiment towards data center-related investments.
See More
Exelon Launches Customer-First Strategy to Alleviate Energy Costs
- Customer Support Initiatives: ComEd, with Exelon's backing, launched a $10 million Customer Relief Fund to address the high energy costs faced by families and small businesses, aiming to provide immediate relief while fostering long-term support.
- Long-Term Solutions: By implementing a Low-Income Discount program and Delivery Time-of-Day pricing, ComEd seeks to assist customers in managing rising energy expenses, thereby enhancing financial stability for its clientele.
- Customer Protection Measures: ComEd has introduced new Transmission Security Agreements to ensure that large energy users contribute to infrastructure costs, shielding residential and small businesses from unfair financial burdens and reinforcing the company's accountability in the market.
- Community Collaboration: ComEd collaborates with Neighborhood Housing Services of Chicago to provide reliable information and resources to residents facing economic pressures, reflecting the company's commitment to supporting and strengthening local communities.
See More
New Director Takes Charge of Energy Dominance Financing Office
- Loan Review Overhaul: New Director Gregory Beard has conducted a comprehensive review of loans approved during the Biden administration, impacting over 80% of the portfolio, approximately $83.6 billion, aimed at ensuring projects align with Trump-era energy goals, thereby protecting taxpayer funds while enhancing project affordability and reliability.
- Accelerated Capital Deployment: Beard stated that the Energy Dominance Financing Office will dispense loans at a record pace, with around 80 active loan applications currently in the pipeline, covering both new projects and those reframed to meet the new administration's priorities, which is expected to drive future energy investments in the U.S.
- Nuclear Energy Focus: With support from the Trump administration, the EDF is prioritizing nuclear projects, planning to back up to 80% of project costs, aiming to quadruple U.S. nuclear capacity by 2050 to address challenges posed by climate change and rising electricity demand.
- Breaking China's Mineral Dominance: The EDF will focus on supporting projects that disrupt China's dominance in critical mineral supply chains, with Beard indicating a commitment to intervene and back initiatives that can interrupt China's strategic plans, thereby ensuring U.S. self-sufficiency in essential materials and enhancing national security.
See More
NextEra and Exelon Approved for 765 kV Transmission Line
- Project Approval: NextEra Energy and Exelon announced that their proposed 220-mile, 765 kV transmission line project has been approved by the PJM board, marking a significant step forward in the Mid-Atlantic region and expected to enhance electric reliability and affordability.
- Regional Impact: The transmission line will provide increased power capacity for West Virginia, Pennsylvania, and the Mid-Atlantic region to meet rising demand while facilitating new energy generation connections to the grid, thereby strengthening regional power infrastructure.
- Economic Benefits: According to Matt Valle, president of NextEra Energy Transmission, the project will deliver long-term safe, reliable, and affordable power for local residents and the economy, indicating a positive impact on local economic development.
- Future Outlook: Although financial details were not disclosed, the implementation of this project will lay the groundwork for future electricity demand growth, further driving the electrification of the power market and aligning with strategic goals for renewable energy development.
See More
Utility Stocks as a Hedge Against Geopolitical Risks and AI Growth
- Defensive Investment Strategy: Wells Fargo analysts highlight that utility stocks like American Water Works and Exelon can serve as strong defensive plays amid escalating market volatility due to the U.S.-Iran conflict, with expectations of continued relative outperformance in both down and up markets.
- Historical Performance Advantage: The utilities sector has historically outperformed the S&P 500 by approximately 780 basis points during global conflicts and recessions, indicating its stability and risk mitigation capabilities during uncertain times, a trend expected to persist amid the current conflict in Iran.
- AI Demand Driving Growth: With a surge in data center construction, utility companies like American Water Works are poised to benefit as they provide essential water resources for AI facility operations, with the stock rising about 8% over the past month and a current dividend yield of 2.4%.
- Exelon's Growth Potential: Exelon's business structure allows it to complete reliability upgrades in the coming years, with load growth expected to reach 3.3% from 2026 to 2029, while its stock has jumped 10% in the past month, currently yielding 3.5% in dividends.
See More
Trump Pushes Tech Firms for Self-Powered AI Data Centers
- Self-Power Commitment: Trump is set to sign an agreement with major tech firms like Amazon, Google, and Meta, mandating them to supply their own power for AI data centers, addressing rising public anger over electricity prices, although the specifics of the commitment remain unclear.
- Rising Electricity Pressure: Average residential electricity prices in the U.S. increased by 6% in 2025, contrasting Trump's promise to halve prices during his term, highlighting the government's challenges in controlling energy costs, which could impact his support in the midterm elections.
- Implementation Challenges: The decentralized nature of electric grid regulations across states poses significant hurdles for the Trump administration in converting the pledge into actionable policy, with experts indicating that new federal legislation is necessary to address power supply shortages.
- Increased Political Pressure: Trump is leveraging his political influence to pressure tech companies into absorbing the costs associated with their data centers, despite the complexities arising from state-level regulation of power generation, which may complicate policy implementation.
See More
Trump Pushes Energy Commitment from Data Centers
- Political Commitment: In his State of the Union address, Trump mentioned securing a pledge from major tech companies to supply power for data centers, although details remain unclear, this could impact future electricity supply and cost structures.
- Growing Power Demand: NextEra Energy plans to build 15 gigawatts of new power capacity to meet data center demands, indicating a shift towards gas generation while emphasizing renewable energy, reflecting changing policy directions.
- Market Dynamics: With accelerated data center construction, the U.S. is expected to face a net negative power supply by 2029, tightening the electricity market and boosting market share for independent power producers.
- Investment Opportunities: Wells Fargo has named Constellation Energy as its top pick among independent power producers, projecting a 40% stock price increase, while other independent producers like NRG and Talen are also viewed positively, indicating optimistic sentiment towards data center-related investments.
See More
Exelon Launches Customer-First Strategy to Alleviate Energy Costs
- Customer Support Initiatives: ComEd, with Exelon's backing, launched a $10 million Customer Relief Fund to address the high energy costs faced by families and small businesses, aiming to provide immediate relief while fostering long-term support.
- Long-Term Solutions: By implementing a Low-Income Discount program and Delivery Time-of-Day pricing, ComEd seeks to assist customers in managing rising energy expenses, thereby enhancing financial stability for its clientele.
- Customer Protection Measures: ComEd has introduced new Transmission Security Agreements to ensure that large energy users contribute to infrastructure costs, shielding residential and small businesses from unfair financial burdens and reinforcing the company's accountability in the market.
- Community Collaboration: ComEd collaborates with Neighborhood Housing Services of Chicago to provide reliable information and resources to residents facing economic pressures, reflecting the company's commitment to supporting and strengthening local communities.
See More
New Director Takes Charge of Energy Dominance Financing Office
- Loan Review Overhaul: New Director Gregory Beard has conducted a comprehensive review of loans approved during the Biden administration, impacting over 80% of the portfolio, approximately $83.6 billion, aimed at ensuring projects align with Trump-era energy goals, thereby protecting taxpayer funds while enhancing project affordability and reliability.
- Accelerated Capital Deployment: Beard stated that the Energy Dominance Financing Office will dispense loans at a record pace, with around 80 active loan applications currently in the pipeline, covering both new projects and those reframed to meet the new administration's priorities, which is expected to drive future energy investments in the U.S.
- Nuclear Energy Focus: With support from the Trump administration, the EDF is prioritizing nuclear projects, planning to back up to 80% of project costs, aiming to quadruple U.S. nuclear capacity by 2050 to address challenges posed by climate change and rising electricity demand.
- Breaking China's Mineral Dominance: The EDF will focus on supporting projects that disrupt China's dominance in critical mineral supply chains, with Beard indicating a commitment to intervene and back initiatives that can interrupt China's strategic plans, thereby ensuring U.S. self-sufficiency in essential materials and enhancing national security.
See More
NextEra and Exelon Approved for 765 kV Transmission Line
- Project Approval: NextEra Energy and Exelon announced that their proposed 220-mile, 765 kV transmission line project has been approved by the PJM board, marking a significant step forward in the Mid-Atlantic region and expected to enhance electric reliability and affordability.
- Regional Impact: The transmission line will provide increased power capacity for West Virginia, Pennsylvania, and the Mid-Atlantic region to meet rising demand while facilitating new energy generation connections to the grid, thereby strengthening regional power infrastructure.
- Economic Benefits: According to Matt Valle, president of NextEra Energy Transmission, the project will deliver long-term safe, reliable, and affordable power for local residents and the economy, indicating a positive impact on local economic development.
- Future Outlook: Although financial details were not disclosed, the implementation of this project will lay the groundwork for future electricity demand growth, further driving the electrification of the power market and aligning with strategic goals for renewable energy development.
See More
