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Meet the ETF Powering Past the S&P 500

Generative AI is draining the power grid, which has made utility stocks a hot commodity

Managing Editor
Oct 25, 2024 at 2:00 PM
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One of the best exchange-traded funds (ETF) on Wall Street this year is boring old utilities. In the midst of a historically bullish month, the Utilities Select Sector SPDR Fund (XLU) is up 28% year-to-date, outpacing the SPDR S&P 500 ETF Trust’s (SPY) 22% gain in the same timeframe. 

XLU hit a record high of $82.50 on Oct. 17, with recent consolidation below this level finding support at its 20-day moving average. The ETF's largest holding, NextEra Energy (NEE), is 35% higher year-to-date, while heavyweights Vistra (VST) and Constellation Energy (CEG) are 227% and 126% higher, respectively, in 2024. 

Utility companies of the past were defined as safe, almost boring investments, but thanks to generative artificial intelligence (AI), they've suddenly been injected with a lucrative growth component. Someone has to power all these AI passion projects that have captivated Silicon Valley, and the utilities sector has risen to the demand challenges, while melting up the charts in the process. 

Want more utility sector coverage? Sign up for Schaeffer's Chart of the Week, and look out for a deeper dive into what's powering AI this Sunday.


 
 

AI has exploded ever since ChatGPT set the world on fire near the end of 2022.

Numerous companies with connections to artificial intelligence have seen their stocks soar.

That includes Nvidia, the poster boy of AI.

Its stock has skyrocketed 716% since ChatGPT’s debut. But here’s the thing …

While everyone’s still counting their money from this first AI boom … Nvidia and countless others have moved on to the next stage.

That includes Big Tech, which is currently making a series of peculiar investments in a few strange companies. This has nothing to do with tech. At least on the surface …

Yet, these strange investments could be the early ripples of a massive wave …Without them, ChatGPT could stop operating … Amazon, Google, Microsoft and more could see profits drop drastically.

In fact, Elon Musk says these investments are critical when it comes to solving the number one problem facing AI.

Now, Silicon Valley legend Michael Robinson has identified two companies that could play a significant role in the solution.

Their stocks just may be the key to AI 2.0.

Find out more about these two companies today.
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