AI Needs Power: Invest in High-Yield Utility Stocks to Ride the Electricity Demand Wave

Core Viewpoint - Brookfield Renewable's CEO highlights a significant shift in electricity demand driven by the AI revolution, presenting investment opportunities for income investors [1] Group 1: AI and Electricity Demand - The CEO of Brookfield believes AI is one of the most significant technological advancements, which could lead to increased electricity demand [2] - Historical examples show that while technological advancements can create excitement, many companies may not succeed, as seen in the electric vehicle and internet sectors [3][4] - The demand for electricity will be crucial for the success of AI companies, indicating a potential investment focus on electricity providers [5] Group 2: Investment Opportunities in Utilities - Regulated electric utilities are positioned well to meet the rising electricity demand from AI, benefiting from their monopolistic status in their service areas [7] - Dominion Energy has experienced an 88% increase in interest from data centers for electricity since July 2024, indicating strong demand in Virginia, a key data center hub [8] - Black Hills anticipates that earnings from data centers and AI will more than double by 2028, with this customer group expected to contribute over 10% of earnings [9] Group 3: Renewable Energy and Nuclear Options - Brookfield Renewable, with a diverse portfolio in renewable energy, expects to benefit from the growing demand for clean power options driven by AI [10] - NuScale Power is developing small-scale modular nuclear reactors, which could be strategically placed near AI data centers, although it is currently not profitable and does not pay dividends [11] - There are various investment options available, from regulated utilities to renewable energy and nuclear, catering to different investor risk appetites [12]