AI is the hottest innovation in the S&P 500. But it's not just the obvious plays.
Utilities stocks are lighting up Wall Street. Eight S&P 500 utility stocks, namely Vistra, Constellation Energy and NRG Energy, are up more than 30% this year, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge.
These utilities stocks are getting a lift from demand for AI. Large language models, like ChatGPT, require massive amounts of electricity to train their databases.
"Stocks in the utilities sector are easily the closest to their 52-week highs, while energy stocks are in the biggest drawdowns at down 17.6%," said Bespoke Investment Group.
Utilities Dominate Tech In S&P 500
It's not just a lucky few utilities topping the S&P 500. It's a broad and definitive trend.
The Utilities Select Sector SPDR ETF is up nearly 29% this year. That not only tops the 20% gain by the S&P 500. It makes the utilities sector the No. 1 S&P 500 sector.
Yes, it beats the 24.1% gain by the Communications Services Select Sector SPDR ETF. But it also trounces the 15.2% rise of the Technology Select Sector SPDR ETF.
What's more, utilities stocks yield 2.6%, vs. just 0.6% in technology.
Top Utilities Stocks
The top utility stock, and top S&P 500 stock, is Vistra. Shares of the Irving, Texas-based utility are up 223% this year. That gives the stock a 99 RS Rating.
But more importantly, analysts see massive growth coming. Analysts think the company's earnings will grow 24% in 2024 and 35% in 2025. Additionally, it yields 0.7%.
Investors' next favorite utility is Constellation Energy. It's up more than 120% this year. The RS Rating is 98. The Baltimore-based utility is also seen growing like crazy. Analysts are expecting a 75% jump in profit in 2024 and 11% in 2025.
Who needs tech stocks when you have utilities?
Top S&P 500 Utility Stocks This Year
| Company | Ticker | YTD ch. |
|---|---|---|
| Vistra | VST | 223.1% |
| Constellation Energy | CEG | 124.3% |
| NRG Energy | NRG | 78.6% |
| Public Service Enterprise Group | PEG | 48.5% |
| NextEra Energy | NEE | 40.1% |
| Entergy | ETR | 30.9% |
| Southern | SO | 30.7% |
| NiSource | NI | 30.5% |
