Meet the ETF Powering Past the S&P 500

Generative AI is draining the power grid, which has made utility stocks a hot commodity

Patrick Martin

Managing Editor

Oct 25, 2024 at 2:00 PM

One of the best exchange-traded funds (ETF) on Wall Street this year is boring old utilities. In the midst of a historically bullish month, the Utilities Select Sector SPDR Fund (XLU) is up 28% year-to-date, outpacing the SPDR S&P 500 ETF Trust’s (SPY) 22% gain in the same timeframe.

XLU hit a record high of $82.50 on Oct. 17, with recent consolidation below this level finding support at its 20-day moving average. The ETF's largest holding, NextEra Energy (NEE), is 35% higher year-to-date, while heavyweights Vistra (VST) and Constellation Energy (CEG) are 227% and 126% higher, respectively, in 2024.

Utility companies of the past were defined as safe, almost boring investments, but thanks to generative artificial intelligence (AI), they've suddenly been injected with a lucrative growth component. Someone has to power all these AI passion projects that have captivated Silicon Valley, and the utilities sector has risen to the demand challenges, while melting up the charts in the process.

Want more utility sector coverage? Sign up for Schaeffer's Chart of the Week, and look out for a deeper dive into what's powering AI this Sunday.

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