AI data centers boost NextEra, Duke, Dominion earnings

Electricity demand from AI data centers is driving a surge in utility profits, with companies reporting strong earnings and outlooks that reflect the sector’s dramatic shift from stability to growth.

The AI boom has upended the traditional utility model. For decades, power companies were seen as slow-moving, dividend-rich stocks, insulated from economic downturns. Now, hyperscalers like Microsoft, Google, Amazon, and Meta are racing to build data centers that run around the clock, demanding unprecedented amounts of energy. Utilities with exposure to these projects are reporting higher-than-expected earnings and outlining multibillion-dollar investment plans to meet demand. This is the fastest growth in electricity demand in decades, and utilities are positioned to benefit.

Earnings this quarter show the impact. Most utilities beat analyst expectations, with executives highlighting AI-related projects that could fuel growth for years. The S&P 500 Utilities Index rose over 20% in 2023, outperforming the broader market during past crises like the dot-com crash and the 2008 financial crisis. While utilities won’t match the explosive growth of chipmakers, their stability—reflected in low volatility and consistent dividends—makes them a safer bet in an otherwise uncertain market.

For investors, utilities are no longer just a defensive play. Companies with direct exposure to data center power contracts are seeing high-single-digit to double-digit earnings growth. The trend is expected to continue as AI adoption accelerates, pushing utilities into a new era of structural growth. The question isn’t whether the boom will last, but which utilities will benefit the most.