Utilities Are The 2026 AI Shovel Trade

Danil SeredaInvesting Group LeaderFollow5ShareSavePlay(11min)Comments(3)SummaryI’m skipping macro bravado and hunting a 2026 sector winner after missing SPY upside; buying laggards may fail because rate cuts are priced in already.Energy looks obvious for yield, yet EIA sees US output and oil prices falling in 2026; with XOM and CVX near 40%, diversification is illusory.Instead, I want a pick-and-shovel exposure to AI: electrification. Utilities capture load growth first as data centers, EVs, and industry demand power more.UBS argues we’re early: electricity share must rise sharply. US IPPs like Vistra benefit from tight wholesale markets, while regulated utilities earn on a rate base.XLU’s top ten median 2026 P/E near 18 could revert toward 21, adding 16.5% plus 2.67% yield; risks are dilution, inflation, and softer power prices ahead. Dilok Klaisataporn/iStock via Getty Images Looking For A Winner Among Sectors We're extremely rapidly approaching the 2025 year's end, so it's time to make traditional market predictions for the next year, which is the reason you've probably already seen a dozenThis article was written byDanil Sereda14.1K FollowersFollowDaniel Sereda is chief investment analyst at a family office whose investments span continents and diverse asset classes. This requires him to navigate through a plethora of information on a daily basis. His expertise is in filtering this wealth of data to extract the most critical ideas. He runs the investing group Beyond the Wall Investing in which he provides access to the same information that institutional market participants prioritize in their analysis. Learn more.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in XLU over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.