EVER SINCE uttering the letters “GPT” became enough to summon a salivating venture capitalist, tech giants have been gobbling up electricity at the scale of small countries, consuming ever-greater power supplies to fuel the AI future. To satiate that hunger, they’re getting increasingly creative: Microsoft signed a power purchase agreement with a nuclear fusion startup in May 2023; Amazon bought a nuclear-powered data center in March; and Meta announced a nearly $40 billion plan for digital infrastructure investment earlier this year.
AI is the new gold, but you can’t mine it without energy. And that could offer an edge to retail investors eager to buy into the trend. Many investors are now leery of the high share valuations of AI-focused stocks like Nvidia or the so-called hyperscalers—the large cloud-services providers like Amazon, Microsoft, and Google that manage the computing power used by AI models. But companies across Big Tech’s energy pipeline could turn out to be more attractive buys.
Utilities have never been sexy, and certainly don’t offer the hockey-stick growth coveted by AI investors, though most pay decent dividends. The S&P 500 Utilities Index has delivered annualized total returns of 6.1% over the past five years, with about half of that coming from dividends; the broader S&P 500 has gained more than 15% a year over that stretch.
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