"Because they operate continuously, data centers consume electricity. These operations involve operating large numbers of servers, cooling systems, networking equipment, and other infrastructure components. The electricity consumption of data centers varies widely with size, capacity, efficiency, and geographic location, yet demand is constant. While that was an important data point over the past few years, many of the top stocks in the sector have delivered outsized gains and may be trading near their highs."
"While utilities have had a decent start to '26, investor concerns have risen due to unfavorable regulatory and political developments. With 36 Gubernatorial elections, the expectation is that the political rhetoric will only increase throughout the year. Further, there have been data center setbacks, further sapping confidence. Despite affordability remaining a key political talking point, we continue to see positive EPS revisions broadly and highlight utilities we view as lower risk due to less political exposure and better earnings upside."
Utilities have rallied over the past 24 months as rising electricity demand from continuously operating data centers increased nationwide. Data center electricity use depends on size, capacity, efficiency, and location, producing steady demand that has boosted sector performance. Many top utility stocks have generated outsized gains and may be trading near highs. Analysts note a positive start to 2026 but emphasize increased investor concerns from unfavorable regulatory and political developments and numerous gubernatorial elections. Selectivity is rising, with preference for utilities that offer safer regulatory exposure, strong dividends, and more reliable earnings upside.
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