World’s #1 Semiconductor stock.
$NVIDIA Corp(NVDA)$ stock investors have a trillion reasons to celebrate.
As of Mon, 13 May 2024 US market closing, YTD Nvidia has gained +87.67%.
It is only 13% shy of a 100% return on investment, not even 6 months into 2024.
Only in the US market.
Surprisingly, owners of two S&P 500 utility stocks have done even better in 2024.
According to data from S&P Global Market Intelligence and MarketSurge, shares of S&P 500’s two utilities stocks have outperformed or is as-closed as Nvidia’s +88% YTD gain. (see bottom)
They are:
For those who have been readingmy posts (thanks!) on a regular basis, it should not come as a surprise.
This is because I have highlighted (without specifics, though) in my posts about the Utilities sectors:
Sun, 12 May 2024 post (click here ! to read) where I have shared the SPDR ETF Sector Tracker performance.
Mon, 06 May 2024 post (click here ! to read) where I have share the SPDR S&P 500 Sector ETF performance.
Catalyst driving Utilities sector?
When two S&P 500 stocks in the "sleepy" sector have outperformed Nvidia, it is both telling and one of the biggest S&P 500 twists in 2024.
It is because the AI stock boom is “spreading out” to Utilities. Huh?
Simply put, it is going to take lots of power to run all AI models.
According to LPL Financial, Chief Technical Strategist, Adam Turnquist:
The excitement surrounding AI has left many investors searching for the next big thing after meteoric rallies in stocks like Nvidia & Super Micro Computer Inc ($SMCI).
Investors are starting to kick the tires on the sector as a potential derivative play to the AI boom.
The S&P 500 Utilities Rally
As of Mon, 13 May 2024, the $Utilities Select Sector SPDR Fund(XLU)$ is up +10.93% YTD. (see above)
While the $Technology Select Sector SPDR Fund(XLK)$ is up +9.68% YTD.
Whatmore, the utilities yields have not even been counted & included yet.
Overall, the Utilities ETF is yielding 2.97% versus just 0.7% in the Technology sector.
The Utility rally is more than a "play it safe" defensive investment, says Turnquist.
Artificial Intelligence (AI) models consume massive and growing amounts of power.
That will be a boon for utilities.
According to the International Energy Agency (IEA):
A typical Google search uses a small amount of energy (around 0.3 watt-hours).
A similar ChatGPT search uses more (2.9 watt-hours) that is +967% more energy consumed.
If and when Google searches were replaced by generative AI searches, the energy used would spike yearly (more around 10 terawatt-hours).; assuming there are about 9 billion Google searches daily.
Utilities companies are already gearing up for this new demand.
Total capital expenditure by 34 electric companies in the US, is expected to go up by +30% between 2022 and 2026. Turnquist said.
The Nvidia Beaters.
Due to limited real estate, will focus on the “better” performing of the 2 Utility stock - Vistra Energy Corp.
Vistra is the utility stock to beat.
Shares of the Irving, Texas-based electric utility are up +136.85% YTD in 2024.
Making it the 2nd best S&P 500 stock so far.
It is not just enthusiasm for what theoretically might happen.
Analysts already forecast the company will make $6.10 a share in 2024.
If that pans out, it would be earnings growth of more than 106%.
Although, earnings in 2025 are expected to fall, 2025 revenue is forecasted to jump another +11%.
Not forgetting that Vistra shares also yield 0.9%.
The best performing stock is still pure AI play stock - Super Micro Computer (SMCI).
As of Mon, 13 May 2024 - its up +174.22%.
But it's getting a real run from utilities of all things.
My viewpoints: (mine & mine only)
Now that the top 3 stocks have soared so high, are there still buy-in opportunities?
How much upsides are there ?
Perhaps should look for alternate utilities stocks that have not been uncovered by investors instead?
It is back to the drawing board!
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Comments
Nah NVDA is alwayys the best
Not a good performance today :(
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