Why Utilities Are Lighting Up the Stock Market?
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This spring, “AI caught the market by storm,” says Douglas Simmons, portfolio manager of the $1.2 billion Fidelity Select Utilities mutual fund. “It became recognized more broadly among generalist investors that utilities have become a play on AI.” In the past few months, though, utilities have left the rest of the market in the dust. These dullest of all stocks have suddenly become a bet on the single flashiest area of the market: artificial intelligence. AI requires a lot of computing power, and computers use a lot of electricity. And the expansion of data centers, “driven by the insatiable appetite of AI,” is the fastest-growing source of industrial demand.
AI is a great trend that requires a more prompt solution than what utilities in high demand urban zones can provide. Presently wind mills in distant underpopulated areas are having difficulty in connecting to the highly populated zones because of licensing and wiring capacity constraints. So why not locate high demand data centers near those distant wind mills instead of next to Dulles airport that taxes the tight electrical grid around Washington D.C.?
Another advantage of using underpopulated zones as big data centers is that they could build mini nuclear power plants with little local objection to supplement the wind mill power.
