Utility stocks offer AI exposure and a hedge against a slowing economy at a good price, Goldman says

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Eversource Energy,American Electric Power Company Inc,Southern Co

Utilities have gained about 18% in the past three months, but the stocks remain relatively affordable.

Utility stocks are an affordable way to gain exposure to the artificial intelligence trend and hedge against a slowing economy even after the sector's recent rally, according to Goldman Sachs. Utilities have gained nearly 18% in the past three months to become the best performing sector in the S & P 500 in that period. The three-month return is one of the sector's strongest performances in two decades, surpassed only by the rallies in 2003 and 2020, according to Goldman.

NextEra , Xcel Energy , Sempra and Southern Company offer the best exposure to the data center power demand surge among Goldman's buy-rated stocks, according to the bank. Goldman also has buy ratings on American Electric Power Company , Eversource Energy , and FirstEnergy Corp . Utilities also offer a way to play defense against a slowing economy, according to Goldman. The investment bank expects the U.S. economy to grow 3.2% in the second quarter but then slow to 2% in subsequent quarters.

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