ETSC, Hyperscalers, And The Utilities -- May 30, 2024

Locator: 47999ETSC.

I really don't care one way or the other about this utility story from an investing point of view. For me, this is just another example of folks not realizing (or maybe they do -- more on that later, perhaps) the "hugeness" of the "data center phenomenon." And it's all electricity. 

That's why I have a "locator tag" abbreviated ETSC -- "energy transition supercycle." For me, posted most recently May 16, 2024:

ETSC:

• utilities
• copper
• tech that saves energy (better chips)

Again, if this doesn't get analysts' attention, I don't know what will -- these data centers are going to be drawing so much power, the "movers and shakers" are backing small modular nuclear reactors to power new data centers link there). North Dakota (MDU) is already facing the problem of adequate electricity supply.

So, from SeekingAlpha late today:

The S&P 500 Utilities group looks set to exit May by further solidifying its turnaround to become a top-performing sector this year, with gains sparked by investors seeking AI investment plays.

One day before May trade ends, all 10 of the largest holdings in the Utilities Select Sector SPDR ETF have logged advances for the month, led by a +20% surge in Constellation Energy. The S&P 500 Utilities index itself has gained ~6% this month alone and was up ~11% YTD. The sector was the worst performing on the S&P 500 earlier this year, extending that status from 2023. But it now stands as the top gainer so far in Q2, spurred by investors wanting exposure to companies supplying energy and services to run AI-related data centers that more businesses are using. Goldman Sachs this week said it’s still bullish on the S&P 500 Utilities sector. Bank of America in a recent update said utility funds experienced the largest weekly inflow since November 2022, with a $700M haul.

Here’s how the top 10 holdings in the ETF have fared in May through Thursday, May 30:

• NextEra Energy - Up 16.75% Weight: 14.70%
• Southern Co. - Up 6.2% Weight: 7.86%
• Duke Energy - Up 3.1% Weight: 7.23%
• Constellation Energy - Up 21% Weight: 6.59%
• Sempra - Up 3.9% Weight: 4.35%
• American Electric Power  - Up 2.5% Weight: 4.30%
• Dominion Energy  - Up 4.9% Weight: 4.10%
• PG&E  - Up 6.8% Weight: 3.61%
• Public Service Enterprise - Up 7% Weight: 3.41%
• Exelon - Up 2.3% Weight: 3.36%.