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Vistra Is First Utility to Top S&P 500 Since 2001 Amid AI Boom

Dec 31, 2024 - financialpost.com
Vistra Corp. achieved a remarkable feat by becoming the first utility stock since 2001 to top the S&P 500 Index, with a 264% annual gain. This performance is attributed to the growing demand for power driven by artificial intelligence and data centers, as well as increased acceptance of nuclear power as an emissions-free energy source. Vistra's success is part of a broader trend where independent power producers, particularly those with nuclear facilities, have outperformed traditional utility stocks. Other top-performing utility stocks include Constellation Energy, NRG Energy Inc., and Entergy Corp.

The surge in utility stocks, particularly those involved in nuclear power, is fueled by significant power purchase agreements with tech giants like Microsoft and Amazon. However, there is caution among some analysts, such as Morningstar's Travis Miller, who believes the market is overly optimistic about Vistra's long-term prospects. Despite this, many Wall Street analysts remain bullish, expecting further gains. The rally in utility stocks, while promising, also carries potential volatility, especially if the anticipated growth in energy demand does not materialize.

Key takeaways:

  • Vistra Corp. achieved a 264% annual gain, topping the S&P 500 Index, a feat not accomplished by a utility stock since 2001.
  • The growth of artificial intelligence and data centers has fueled demand for power, benefiting utility stocks like Vistra.
  • Independent power producers, especially those with nuclear facilities, have seen significant gains, with Vistra leading the pack.
  • While some analysts are optimistic about Vistra's future, others caution that the market may be overly optimistic about its long-term growth potential.
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