Tech giants Apple, Amazon, Alphabet, Microsoft, and Meta reported quarterly results showing the AI boom’s continued growth. Demand for data center capacity to handle AI workloads and store vast amounts of data is surging.

Google, Amazon, Meta, and Microsoft are expected to spend over $350 billion on data centers in 2022 and over $500 billion in 2026. Data centers are massive energy consumers, with AI applications requiring even more power than traditional computing.

The rapid expansion of data centers in the U.S. is projected to increase grid power demand by 22% by the end of 2025 and nearly three times as much by 2030. Data centers consumed less than 2% of U.S. electricity before 2020, but could reach 12% by 2028.

Utilities is the third best-performing sector this year, with a nearly 18% increase, outpacing Technology and Communication Services. Historically, utilities have outperformed during economic slowdowns due to the essential nature of electricity even in challenging times.

The utilities sector could benefit from lower interest rates, increased M&A activity, and potential investments from private equity and infrastructure funds. Power producers like Vistra, Constellation Energy, and NRG Energy are poised to benefit from the growing electricity demand driven by data centers.

Read more at Nasdaq: How Rising AI Power Demand Is Fueling Utility ETFs