We're on the verge of "Version 2.0" in electricity. And in the coming years, this mostly "boring" sector will get exciting. It all comes down to two emerging technological megatrends...
This Overlooked Sector Just Turned 'Bullish' in the Power Gauge
By Pete Carmasino, chief market strategist, Chaikin Analytics
We're on the verge of "Version 2.0" in electricity. And in the coming years, this mostly "boring" sector will get exciting.
It all comes down to two emerging technological megatrends...
The first one is artificial intelligence ("AI"). It's reshaping how we think about what computers can do. But notably, training and running AI machines takes a lot of electricity.
Secondly, cryptocurrencies are reshaping how the world thinks about exchanging value for goods and services. Love them or hate them, you can't deny that they're making waves.
And just like AI, it takes a massive amount of electricity to develop cryptocurrencies.
After all, these tasks require massive amounts of computational power. That translates to the need for huge data centers. And of course, these data centers need a ton of electricity.
Most people don't realize that these two technologies will increase our collective demand for electricity exponentially in the coming years. And it'll be hard for supply to keep up...
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About a third of the world's data centers are in the U.S. today. And according to a recent study from the International Energy Agency ("IEA"), their energy usage is exploding...
The IEA noted that U.S. data centers' electricity consumption rate was about 200 terawatt-hours ("TWh") in 2022. By 2026, it expects the rate in the U.S. to climb to about 260 TWh.
This shift will be even more dramatic worldwide...
According to the IEA, global data centers consumed about 460 TWh in 2022. In the high case, the IEA believes the number could surge to more than 1,000 TWh by 2026...
To put that in perspective, 1,000 TWh is roughly equal to Japan's total electricity usage.
It isn't just about the power that computers need to run AI applications or mine cryptos, either. The data centers also need to be cool enough for all the equipment to run properly.
Electric cars are another burgeoning source of electricity consumption...
Now, a lot of folks believe that the current generation of electric cars is a boondoggle. But like them or not, they'll also ramp up our total electricity demand in the coming years...
In fact, driving an electric car the national average of just 37 miles per day would lead to 353 kilowatt-hours ("kWh") of charging per month. Meanwhile, the average monthly power consumption in California is 572 kWh.
So in other words, an electric car could increase the average household power consumption in California by about 62%. And that's just for one car driven an average distance each day. Think about the massive burden of households with two electric cars that get driven a lot.
The potential demand from electric cars alone is insane. And my point is simple...
Utility companies need to start upgrading their facilities to keep up with this demand.
The demand for electricity is growing faster than the capabilities of our utility grid. And several areas of our new technology-filled world are driving this long-term change.
Conservatively, the Department of Energy expects U.S. electricity demand to rise nearly 40% through 2050. But fortunately, we don't need to wait 26 years to take advantage...
You see, the recent market volatility has renewed investors' interest in utilities.
In fact, after months of lower ratings, the Utilities Select Sector SPDR Fund (XLU) just turned "bullish" in the Power Gauge. Take a look...
Folks, the takeaway is simple. If you're not paying attention to this space now... I recommend you start.
Good investing,
Pete Carmasino
P.S. Taking it a step further in the new issue of my Chaikin PowerTactics newsletter last week...
I just identified a big opportunity with a company that's a direct beneficiary of the shift in investor interest in utilities and the electrification trend.
Even better, the Power Gauge signaled that this stock just underwent a tactical turning point – making it the perfect time to put money to work.
If you aren't already a PowerTactics subscriber, find out how to get access to this brand-new recommendation – and a year of access to the Power Gauge – right here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+1.19%
5
22
3
S&P 500
+1.24%
114
317
65
Nasdaq
+2.01%
21
59
20
Small Caps
+0.99%
477
1031
396
Bonds
+1.01%
Information Technology
+2.79%
18
37
10
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are somewhat Bullish. Major indexes are all bullish.
* * * *
Sector Tracker
Sector movement over the last 5 days
Utilities
+3.35%
Real Estate
+1.54%
Information Technology
+1.36%
Discretionary
+1.14%
Health Care
+0.62%
Staples
+0.38%
Communication
+0.12%
Industrials
+0.09%
Materials
+0.01%
Financial
-0.59%
Energy
-3.31%
* * * *
Industry Focus
Capital Markets Services
33
28
2
Over the past 6 months, the Capital Markets subsector (KCE) has outperformed the S&P 500 by +7.56%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #1 of 21 subsectors.
Top Stocks
AMP
Ameriprise Financial
PIPR
Piper Sandler Compan
IBKR
Interactive Brokers
* * * *
Top Movers
Gainers
AMGN
+11.82%
GEV
+8.08%
ENPH
+7.67%
LYV
+7.24%
FSLR
+6.12%
Losers
EXPE
-15.25%
FTNT
-9.69%
PARA
-7.0%
TRMB
-6.92%
IR
-6.6%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
PGR, TSN
AXON, L, MCHP
FIS, FMC, IFF, O, SPG, VRTX, WMB
No earnings reporting today.
Earnings Surprises
LNG Cheniere Energy, Inc.
Q1
$3.21
Beat by $0.89
CBRE CBRE Group, Inc.
Q1
$0.78
Beat by $0.09
HSY The Hershey Company
Q1
$3.07
Beat by $0.31
CBOE Cboe Global Markets, Inc.
Q1
$2.15
Beat by $0.11
EOG EOG Resources, Inc.
Q1
$2.82
Beat by $0.12
* * * *
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