In 2024, utility stocks rebounded strongly, rising 20% after a challenging 2023. This surge was driven by the rapidly growing demand for electricity, fueled by the explosive adoption of artificial intelligence (AI) technologies. AI’s power-hungry data centers, requiring immense energy for processing and cooling, have created a new growth avenue for utilities.

Winners in 2024:

• $ETR (Entergy): +49.86% – Benefiting from AI-driven demand and strong grid investments in Louisiana.
• $NI (NiSource): +38.46% – Indiana’s leading utility profited from infrastructure upgrades and energy transition projects.
• $IDA (Idacorp): +11.15% – Leveraging Idaho’s stable energy market and AI-related industrial activity.
• $PPL (PPL): +19.78% – Pennsylvania-based PPL capitalized on its modernized grid and capacity expansion.
• $PNW (Pinnacle West): +18.00% – Positioned well in Arizona’s growing tech hub fueled by AI.
• $XEL (Xcel Energy): +9.06% – Supported by its clean energy initiatives and AI-driven industrial energy demand.

Outlook for 2025:

The utility sector is now diverging into two categories:

1. High-Growth Names: Companies investing heavily in modern grids and renewable energy to meet AI-related demand are poised for continued success.
2. Slower-Growth Utilities: Firms focused on traditional energy delivery face slower growth prospects.

The rise of AI and its need for vast energy consumption creates a long-term growth opportunity for forward-thinking utilities. Investors are likely to favor those adapting to the tech-driven energy landscape.