How AI fits into the future of utility stocks
The utilities sector (XLU) has remained nearly flat year-to-date when compared to the massive gains seen in other sectors in 2024, such as technology. Citi Equity Analyst Ryan Levine believes that the utilities sector's poor performance has gone on for too long, pointing to AI as "the real emerging story" that will "create a demand growth for the industry at large."
"There's two groups of companies - companies on the regulated utility side and then on the unregulated side," Levine explains to Yahoo Finance. "On the regulated side, companies as you articulate in terms of close proximity to the data center buildout. So we identify Georgia as a state that's very attractive and are recommending Southern Company (SO) on that theme."
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Palantir software in the utility field will save millions of dollars and benefit utility stocks!
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This video is just a thinly veiled attempt to pump up certain utility stocks without providing any real substance. The supposed "AI growth story" is thrown around as a buzzword to generate hype, but there are no concrete details on how AI will actually drive significant electricity demand growth. The analyst cherry-picks a couple of companies like Southern Company and NextEra as beneficiaries while glossing over the risks and challenges. He downplays concerns about competition from rising bond yields, wildfire liabilities, and the willingness of data centers to sign long-term contracts. In reality, the utility sector's underperformance this year is likely justified given the headwinds it faces. Don't be fooled by Wall Street's self-serving attempts to drum up interest in select stocks. Do your own thorough research before investing in this space.