Wells Fargo says AI and data centers are “increasingly driving stock market performance,” and expects this sector to see the biggest benefit

Wells Fargo’s brokerage, investment and financial advisory arm highlights a market segment that could benefit significantly from increased investments in artificial intelligence (AI) and data centers.

Wells Fargo Advisors He says The current performance of the stock market is driven by investments in artificial intelligence and data centers. According to Wells Fargo Advisors, utilities are one of the main beneficiaries of this booming investment.

“As a major data center supplier, the utilities sector is riding this wave of demand and delivering strong returns, a trend we expect to continue.”

Wells Fargo Advisors says electric utilities are “likely to see the greatest benefit from data centers” compared to other subsectors.

“As owners of power generation and distribution assets, utilities – electric utilities in particular – will benefit from building infrastructure over the long term. In fact, many have already raised their long-term annual earnings growth forecasts to the high single-digit to low-double-digit range. When coupled with dividend yields of 2% to 3%, this supports an attractive total return outlook, in our view.”

Besides electric utilities, Wells Fargo Advisors says other utility subsectors will also benefit, but to a lesser extent.

“However, electric utilities do not have a monopoly on data center energy demand. Natural gas distributors (also utilities), producers (energy companies), and pipeline operators also benefit by providing fuel or building on-site power plants on data center campuses.”

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