Recently, with the rapid development of artificial intelligence (AI), the demand for electricity has been rising steadily, attracting significant investor attention to utility stocks. In May and June of this year, US utility funds attracted over $1.7 billion in capital inflows, marking the best performance in nearly two years.
It is anticipated that in July, utility funds will receive an additional $1.1 billion, primarily flowing into the "Utilities Select Sector SPDR" (XLU) exchange-traded fund.
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Utility stocks are often regarded as a safe haven during market fluctuations, so their attraction of capital in a strong bull market has drawn widespread attention. Investors have found that compared to buying tech stocks that have already seen significant gains, such as Nvidia, Microsoft, and Google, utility stocks offer a cheaper option for accessing AI market opportunities. Jay Jacobs, head of US Thematic and Active ETFs at BlackRock, noted that investors are turning to utility funds to seek AI investment opportunities beyond "big tech" stocks.
Currently, major tech companies like Microsoft and Google are investing heavily in data centers to meet the growing demand for electricity. This demand is driven not only by the development of AI but also by the proliferation of electric vehicles and the resurgence of manufacturing. According to data from the International Energy Agency, internet searches conducted using AI services like ChatGPT require about 2.9 watt-hours of electricity, compared to just 0.3 watt-hours for traditional Google searches, indicating that AI demands significantly more power than ever before.
In this context, Churchill Management in Los Angeles has significantly increased its utility investments over the past few months, adding $68 million to its XLU investment in the second quarter. The company's president, Randy Connor, pointed out that utilities have become an industry worth watching, with any business related to AI sparking market enthusiasm.
In recent years, the stock prices of US utilities have also risen notably, with the S&P 500 Utilities Index up 10.4% year-to-date. In a recent electricity market auction, PJM grid operator prices surged over 800%, signaling a strong market for power investments. Edison International recently increased its capital expenditure plan from $6 billion to $8 billion, reflecting the rapid growth in electricity demand.
Investor confidence in the utility sector is recovering, marking a "collective reversal" after a net outflow of over $7.4 billion in the past 12 months. Due to changing market conditions and ongoing demand for electricity, the outlook for utilities is widely regarded as positive.
Key Points:
🌟 Utility stocks are attracting investor attention due to the surge in AI-driven electricity demand.
💡 In May and June, US utility funds attracted over $1.7 billion in capital inflows.
⚡ Edison International plans to significantly increase capital expenditures to meet the rapidly growing demand for electricity.