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Utilities underperformed AI stocks by 330 bps YTD as S&P 500 rose 9.8% in 2026; analysts flag power, cooling and data‑center bottlenecks as new growth drivers.
U.S. utilities have lagged the AI‑driven S&P 500 rally by roughly 330 basis points this year, prompting analysts to flag the sector as a potential next beneficiary of AI‑related spending on power and cooling infrastructure【4】.
| At a glance | |
|---|---|
| Utilities YTD performance | +7.5% (vs. S&P 500 +9.8%) |
| Underperformance vs. AI stocks | –330 bps |
| Data‑center power demand forecast | 31 GW (2025) → 66 GW (2027) |
| Nvidia Q2 revenue | $81.6 bn (incl. $75.2 bn data‑center) |
The S&P 500’s AI‑fuelled run has left utilities trailing, a gap quantified by Wells Fargo analysts as a 330‑basis‑point lag behind the broader index【4】. This underperformance is partly due to the sector’s traditionally defensive profile and regulatory headwinds, which have kept investor focus on higher‑growth AI builders. Yet the same AI expansion is creating new demand for electricity, cooling and real‑estate capacity needed to host dense compute clusters. Industry estimates project U.S. data‑center power needs to more than double from 31 GW in 2025 to 66 GW by 2027, with a further rise to 74 GW by 2028 and a 49‑GW shortfall in supply【3】. Such constraints suggest that utilities could capture a larger share of AI‑related capex as the technology moves from pure compute to the supporting infrastructure layer.
The broader market has already priced AI spending into mega‑cap chip makers, with Nvidia reporting $81.6 bn in quarterly revenue—$75.2 bn of which came from data‑center sales—while still describing demand as “unprecedented”【3】. As the AI spend cascade reaches power distribution, thermal management and data‑center real estate, investors may begin rotating into utilities that stand to benefit from the inevitable electricity and cooling demand. Vanguard’s global chief economist, Joe Davis, notes that historically the users of transformative technologies capture more long‑term value than the builders, citing electricity’s wealth creation for manufacturers over utilities as a precedent【1】. This view aligns with the current market narrative that the AI trade is broadening beyond chips to the physical stack, positioning utilities as a defensive yet growth‑linked play.
Utilities’ modest 7.5% gain this year, while modest compared with the AI‑heavy S&P 500, may represent the early stage of a broader shift where power and cooling become the next growth frontier tied to AI adoption. The key question is whether the sector can translate rising infrastructure demand into sustained earnings growth as the AI ecosystem matures.
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AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 4 outlets · Jul 23, 2026 · How we report
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