Are you looking to capitalize on the latest trends in the utilities sector? Look no further than the rising excitement surrounding artificial intelligence and its impact on the industry.
According to Morningstar, the utilities sector has seen a remarkable turnaround from its 2023 slump, with a 10% surge in 2024 driven by the expected demand for electricity to power AI data centers. This growth comes after a tough year in 2023, where the sector suffered a 10.2% decline due to higher interest rates making borrowing more costly for utilities.
Travis Miller, energy and utilities strategist for Morningstar, believes that the market has been underestimating the potential of utilities. He points out that the sector hit a low point in early October but has since rallied over 25%, showing significant growth potential. With competitive yields and strong financial positions, utilities present attractive opportunities for investors.
Miller and his team have highlighted their top picks in the sector, including NiSource, Entergy, WEC Energy, and Duke Energy. These companies are well-positioned to benefit from the expansion of AI data centers and the increasing demand for electricity.
For example, NiSource recently secured a deal to provide electricity and natural gas to a new $1 billion data center in Indiana, signaling potential for growth in their electric and gas networks. Similarly, WEC Energy is set to benefit from Microsoft’s $3.3 billion expansion of its national cloud and AI infrastructure, with a data center campus in Wisconsin that will significantly increase electricity load in the region.
Entergy, on the other hand, is expected to see growth from industrial customer expansion on the Gulf Coast and a focus on renewable energy. With a track record of increasing dividends and a strong growth investment plan, Entergy presents an exciting opportunity for investors.
If you’re looking to invest in the utilities sector, keep an eye on these top picks and the potential for growth driven by AI data center development. With competitive yields, strong financial positions, and exciting prospects for growth, utilities are certainly worth considering in your investment portfolio. Stay ahead of the curve with Extreme Investor Network for the latest insights and opportunities in the investing world.