As artificial intelligence (AI) reshapes industries, utility companies emerge as unexpected victors, crucial to powering AI’s expansion.
Investors are noticing, shifting focus from traditional tech giants to these vital enablers. AI is revolutionizing sectors from chip making to automotive.
This revolution boosts stock markets, shown by recent index trends and company valuations.
AI’s energy needs, especially in data centers, are expected to rise 900%, equal to the output of four nuclear plants.
This week, Meta faced its steepest stock decline since October 2022 after revealing escalating AI costs.
Conversely, Alphabet soared, surpassing $2 trillion in market value, with Microsoft also demonstrating significant AI progress.
Utility companies are crucial due to AI’s high energy needs, highlighted by Manju Naglapur from Unisys as a direct result of AI growth.
Although utilities struggled in 2023, dropping by 10%, 2024 sees a rebound with a 4.4% rise, thanks to strategic cost management.
US utilities are scaling up for an unprecedented electricity demand spike, necessary for expanding data centers.
Beyond Virginia’s Data Center Alley, where Dominion Energy paused new connections in 2022 due to grid issues, plans for new plants and lines are underway.
Utilities Power Up: The New A.I. Energy Drivers
Data centers may soon use more electricity than entire nations, like India.
Goldman Sachs created investment baskets “Power Up America” and “Data Center Equipment,” targeting utilities, smart grids, and power generation firms.
These baskets are excelling; Power Up America has jumped 28%, and Data Center Equipment 18%, surpassing broader tech and communications sectors.
Looking ahead, expectations for the Power Up America basket are set 21% higher than earlier predictions.