Utilities Repriced for the AI Era, Monopoly Power Meets Surging Data Center Demand

Core Insights - Utilities are becoming essential infrastructure for the AI economy, driven by increasing power demand from data centers and AI technologies [4][9] - The utility sector has shown strong performance, particularly in the Southeast and Eastern United States, where many data centers are located [2][3] - The monopoly status of utilities provides them with a unique competitive advantage compared to AI developers, who face significant competition [6][7] Company Highlights - Southern Company (NYSE: SO) is recognized for its regulated operations and predictable cash flows [1] - Entergy (NYSE: ETR) is noted for its significant presence in Louisiana and the Gulf region, where new data center construction is ongoing [1] - Duke Energy (NYSE: DUK) is favored for its exposure to fast-growing population centers and enterprise demand [2] - Dominion Energy (NYSE: D) is highlighted as a high-quality dividend payer with a yield exceeding 4% [1][3] Market Dynamics - Utilities have experienced a pullback of approximately 10% recently, creating potential buying opportunities as many stocks approach oversold levels [3][12] - The demand for electricity is expected to remain strong due to factors such as population growth and extreme weather, regardless of the pace of AI adoption [7][17] - Investors are advised to adopt a gradual approach to buying utility stocks, starting with partial positions and adding on weakness [8][19]