Can AI survive without utility companies

Five charts to start your day

In a twist that has caught many investors off guard, utility stocks have emerged as the top performers in the stock market for 2024, outshining even the much-hyped tech sector. While artificial intelligence and the US Federal Reserve's moves have dominated financial headlines, it's the oft-overlooked utilities – companies providing electricity, water, and gas – that are leading the market charge, with a staggering 27 percent gain year-to-date.

This surge has propelled utilities past the typically high-flying Information Technology (+26%) and Communication Services (+25%) sectors. While the tech sector thrives on innovations in AI and cloud computing, the very infrastructure that makes these innovations possible – data centres – depend on utility companies for reliable and abundant power.

Data centres, now a cornerstone of the AI and cloud storage boom, are energy-intensive, accounting for roughly 1-2% of global electricity use, a figure that is expected to grow as AI applications expand. Without the power provided by utility companies, such advancements in AI would be impossible.

Leading the pack is Vistra Corp., a relative newcomer to the S&P 500 index, which has seen its stock soar by over 130 percent this year. Not far behind is Constellation Energy Corp., America's largest operator of nuclear power plants, with a 71 percent gain. These companies are capitalising on the growing demand for reliable power sources to fuel the AI revolution, with Constellation's CEO, Joseph Dominguez, emphasising the critical role of data centres in driving technological innovation and national competitiveness.

Source: Chartr

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