Wells Fargo Advisors says the stock market's momentum is now driven by artificial intelligence and data center investments.
As a key supplier in the data center landscape, the Utilities sector is riding this demand wave and has produced strong returns-a trend they expect to continue.
Electric utilities in particular are likely to see the greatest data center benefit. Their ownership of power generation and distribution assets positions them for long-term infrastructure growth. Many have already raised earnings growth outlooks into the high-single- to low-double-digit range, and combined with 2% to 3% dividend yields, this supports attractive total return prospects.
Other utility subsectors, including natural gas distributors, producers, and pipeline operators, are also benefiting by supplying fuel or building on-site power generation at data center campuses.