10 Best Performing Utility Stocks in 2025

Core Insights - The S&P Utilities index increased by 12.7% in 2025, underperforming the S&P 500's 16.4% gains, with the utilities sector benefiting significantly from the AI boom and increased demand from data centers [1][2] - Long-term power purchase agreements (PPAs) signed by hyperscalers with utility companies contributed to the outperformance of utility stocks for most of 2025, although concerns about a potential AI bubble led to a pullback in the last quarter [2] - The Energy Information Administration projects that US electricity demand, which reached a record high in 2025, will continue to grow, driven by data centers, cryptocurrency, and the electrification of homes and businesses [3] Utility Sector Performance - The utilities sector has emerged as a major beneficiary of the AI boom, with significant investments flowing into energy-intensive data centers [1] - Despite a late-year pullback due to investor concerns about the sustainability of AI-related investments, the sector maintains strong growth potential [2] Methodology for Stock Selection - The article identifies the best-performing utility stocks based on historical data from Yahoo Finance, focusing on stocks with a market cap of at least $2 billion and ranking them by gains from December 31, 2024, to December 31, 2025 [5] - The analysis includes the number of hedge fund investors for each stock as of Q3 2025, indicating interest from institutional investors [5][6] Company Highlights - Entergy Corporation (NYSE:ETR): Achieved a share price gain of 21.91% in 2025, supported by analyst upgrades and strong industrial sales growth [7][9][10] - American Electric Power Company, Inc. (NASDAQ:AEP): Experienced a 25.02% share price gain in 2025, although faced a downgrade from 'Buy' to 'Neutral' due to valuation concerns despite a strong growth outlook [12][13][14]