US utilities surge in 2025 driven by higher power demand, AI boom

Shares of U.S.-based utilities rally in 2025 driven by higher power demand for data center expansions related to growing AI needs

Utility GE Vernova GEV.N rose about 100% YTD and Constellation Energy CEG.O gaining 59.6% YTD

In early December, NextEra Energy NEE.N expanded its partnership with Alphabet's Google GOOGL.O to develop new energy supplies for Google's U.S. operations and separately agreed to restart an Iowa nuclear plant shut five years ago

Tech giants including Google, Microsoft MSFT.O and Amazon AMZN.O have already inked deals to source power from next-generation nuclear technologies, such as fusion and small modular reactors

Analysts at Scotiabank expect another year of solid returns in 2026, particularly for power stocks and U.S. utilities with meaningful data center exposure

"We also emphasize that, though outperformance vs. a bullish, risk-on market may be unlikely, utilities offer a unique defensiveness that provides a hedge against a potential downturn that other AI-focused sectors lack" - Scotiabank

Shares of NEE up 12.3% YTD, Evergy EVRG.O rise 18.9% YTD, American Electric AEP.O up 25.7% YTD and Eversource Energy ES.N up 17.6% YTD