Utilities Outpace S&P 500, Fueled By AI: These 2 Stocks Lead The Charge

While the S&P 500 is up 20.30% year-to-date, utilities — tracked by Utilities Select Sector SPDR Fund XLU — have surged by 26.99%.

The sector is outpacing the market's biggest names, including tech and communication services.

The leaders posting significant gains in this space include NextEra Energy Inc NEE, Southern Co SO and Duke Energy Corp DUK. But it’s Vistra Corp. VST and Constellation Energy Corp CEG that are embracing the AI revolution to supercharge their growth.

Vistra, Constellation: The New Tech Titans?

Vistra stock has rocketed 205.61% this year, becoming the top-performing stock in the S&P 500. With its focus on nuclear energy, it's carving a niche in powering AI data centers.

Constellation Energy is up 119.86%, and has similarly thrived. The company struck deals with Microsoft Corp MSFT to fuel the tech giant's AI and cloud infrastructure with clean nuclear energy.

Read Also: Microsoft Taps Constellation For 20-Year Carbon-Free Power – 3,400 Jobs Coming To Pennsylvania

These partnerships make utilities a surprising AI play, blending old-school reliability with cutting-edge tech applications. The newfound relevance of nuclear power in the AI era is a growth driver that no one saw coming.

Are Utilities The New Safe Haven?

While utilities have long been a defensive play, their AI adoption has turned them into a growth story.

Funds like the Virtus Reaves Utilities ETF UTES, an actively managed fund, are gaining attention. With over 40% year-to-date returns, it's outperforming traditional market-weighted sector peers. UTES' smart bets on Vistra and Constellation have paid off handsomely, proving that even "boring" sectors can surprise investors.

Looking ahead, the rise of electrification-themed ETFs, such as those filed by Global X and Tema, suggests that utilities may continue to thrive in the AI-driven future.

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