US investors are piling into utility stocks as the emergence of power-hungry artificial intelligence drives a surge in electricity demand and transforms growth expectations for the once staid sector. More than $1.7bn poured into US utilities funds, which have about $41bn across them, in May and June, their best showing in nearly two years, according to data from Morningstar Direct. Another $1.
The rapid expansion of power consumption after decades of stagnation has transformed market interest in utilities, which will need to invest heavily to satisfy it. The increase in appeal also comes amid a more favourable interest rate environment, as federal rate cuts later this year could help debt-dependent utilities burdened with high financing costs. Prices soared in a power market auction on Tuesday run by PJM, the largest US grid operator, rising more than 800 per cent versus a year ago.