US utilities rise in 2024 driven by AI boom

NiSource

31/12/2024 20:36

(Updates with history utility out-performance data)
    ** Shares of U.S.-based utilities rally in 2024 with Vistra
Corp  VST.N  gaining ~260% YTD, Constellation Energy  CEG.O  up
~91% YTD
    ** VST is second biggest YTD pct gainer in S&P 500  .SPX ,
just ahead of A.I. favorite Nvidia  NVDA.O . CEG is 10th biggest
gainer, NRG Energy  NRG.N , up ~74% YTD, is S&P's 19th fastest
advancer, according to LSEG data
        ** According to Bespoke Investment Group data, 2024 is
first year in at least the last decade with three utilities
among top 20 YTD S&P 500 gainers. NRG rose most in 2017 as sole
utility in top 20, again the only top-20 utilities stock in 2018
  
        ** Utilities boosted this year by surging demand for
power for data center expansions related to growing AI needs  
    ** Utilities often referred to as "bond proxies," for
strong, stable dividends that compete with Treasury yields
    ** In September, CEG and Microsoft  MSFT.O  signed power
deal to help resurrect unit of Three Mile Island nuclear plant
in Pennsylvania 
    ** YTD S&P 500 utility index  .SPLRCU  up ~19% making it the
fifth biggest advancer among the S&P 500's 11 major industry
sectors with Entergy  ETR.N  up ~49%, NiSource  NI.N  up ~38%,
Public Service Enterprise  PEG.N  up ~37%
    ** "Sector strength in 2024 has been underpinned by
stabilizing rates and inflationary expectations throughout the
year, greater uncertainty created by the election cycle for many
non-utility sectors," said KeyBanc Capital Markets earlier in
December 
    ** Brokerage also cited AI-driven electricity demand
translating into tangible load growth, and earnings per share
growth target revisions  

 (Reporting by Pooja Menon in Bengaluru, Sinéad Carew in New
York)
 ((Pooja.Menon@thomsonreuters.com;
sinead.carew@thomsonreuters.com))