"The artificial intelligence revolution is upon us, and plenty is bound to change in how to conduct ourselves in society. From work to play, the potential applications of AI are seemingly endless, and the rise of LLMs we can all use has driven a new paradigm around investing, and how investors think about the sort of exponential upside this trend can have."
"That said, I'd argue the true "hard" constraint on the growth rate AI can achieve in the coming years really boils down to power. Without electricity, these chips and data centers are useless. And whether we're talking about electricity generated from fossil fuels (natural gas power plants, for example), renewables or nuclear, there are plenty of utility stocks which still look attractively priced based on future demand growth projections I think could be the best bets to play surging AI demand."
Artificial intelligence expansion depends on chips and data centers, but electricity supply represents the fundamental constraint on that growth. High-performance semiconductor and data center companies have attracted most investor attention, yet power availability and capacity ultimately enable AI operations. Electricity can come from fossil fuels, renewables, or nuclear sources, and utilities provide that essential infrastructure. Many utility stocks appear attractively priced relative to valuations in AI-focused tech companies. U.S. electricity demand is projected to grow roughly 25% from 2023 levels, supporting the case for utilities as strategic beneficiaries of sustained AI-driven demand growth.
Read at 24/7 Wall St.
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