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Utility ETFs, American Superconductor Look To Benefit From Trump’s Orders

Jan 28, 2025 - forbes.com
The article discusses the increasing demand for data centers driven by the growth of industries such as artificial intelligence, digital financial technology, and energy production. This surge is straining the national electrical grid, with projections indicating that electricity usage by hyperscalers could consume up to 9% of U.S. electricity generation by 2030. Utility-focused ETFs have seen significant returns, with funds like the Utilities Select Sector SPDR ETF (XLU) and the iShares U.S. Utilities ETF (IDU) experiencing notable gains. The article also highlights the role of companies like American Superconductor (AMSC) in enhancing grid capabilities to meet rising demands, with AMSC's stock showing substantial growth due to its innovative solutions and strategic acquisitions.

AMSC's products, which include systems for wind turbines, grid reliability, and power quality, are positioned to address the growing market demand from sectors like industrials, renewables, and the military. The company reported strong revenue growth and its first profit in 2024, despite a recent stock dip due to an AI market downturn. AMSC anticipates continued revenue growth and a minimal net loss for the upcoming fiscal quarter. The article underscores the potential for infrastructure buildouts in the utilities sector and the need for solutions to manage the increasing energy demands effectively.

Key takeaways:

  • Northern Virginia is the largest data center market in the world, driving increased demand for electricity and infrastructure.
  • Meta Platforms plans to significantly increase capital spending to support AI and a new data center in Louisiana, contributing to the growing demand for electricity.
  • Utilities ETFs have shown strong returns, with the Utilities Select Sector SPDR ETF (XLU) and others experiencing significant growth in 2024.
  • American Superconductor (AMSC) is positioned to address market demand for reliable energy solutions, with its stock soaring 125% in 2024 due to strong revenue growth and strategic acquisitions.
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