The S&P 500 utilities sector has gained well over 15% in 2025. Equities will be affected if the major stock market indices experience another significant decline similar to the one earlier this year. However, history shows that stodgy utility stocks are likely to hold their ground much better than high-flying technology stocks, especially those chasing the artificial intelligence mania. Oddly enough, AI and data center growth are becoming a massive tailwind
Data center construction spend in the US hit a record high of $40 billion a year in June, Bank of America Global Research said in a new report issued this month. The report cited data from the US Census Bureau and noted that the new spending level is a 28% increase from the previous year. Amazon, Microsoft, Google, and Meta are leading the charge with sweeping expansion plans that could total more than $1 trillion in capital expenditures over the next few years.
The AI news cycle of the summer captured themes including the challenge of starting a career, the importance of technology in the China/U.S. trade war, and mounting anxiety about the impact of the technology. But in terms of finance and investing, Deutsche Bank sees markets "on edge" and hoping for a soft landing amid bubble fears. In part, it blames tech CEOs for egging on the market with overpromises, leading to inflated hopes and dreams, many spurred on by tech leaders' overpromises.
Shares of Microsoft (NASDAQ:MSFT) lost 0.64% over the past five trading sessions after slipping 0.55% the five prior as tech's sell-off continues. Still, MSFT is up 42.12% since its year -to-date low on April 8. The company's reported strong Q2 earnings on July 30. The Magnificent Seven mainstay reported EPS of $3.65 versus analysts' expectations of $3.35, while quarterly revenue came in at $76.44 billion. MSFT is now up 20.35% this year.
Pennsylvania is positioning itself as a hub for data centers, attracting billions in investments and creating job opportunities in AI and advanced manufacturing sectors. The state's favorable conditions for data centers, such as cheap energy and a skilled workforce, are drawing tech projects like Project Gravity to the area. Pennsylvania's zoning laws have hindered the development of data centers and residential housing, contributing to rising home prices and rents.
The paper, " Power Stabilization for AI Training Datacenters," argues that oscillating energy demand between the power-intensive GPU compute phase and the less-taxing communication phase, where parallelized GPU calculations get synchronized, represents a barrier to the development of AI models. The authors note that the difference in power consumption between the compute and communication phases is extreme, the former approaching the thermal limits of the GPU and the latter being close to idle time energy usage.
"A lot of this infrastructure, billions of dollars of it, is being built just for a few customers and a few facilities and these happen to be the wealthiest companies in the world," said Ari Peskoe, who directs the Electricity Law Initiative at Harvard University. "I think some of the fundamental assumptions behind all this just kind of breaks down."
AI Growth Zones are designated sites that are well-suited to housing AI-enabled datacentres and their supporting infrastructure, requiring enhanced access to power supplies of at least 500MW.
"With the increasing data throughput required in AI and other applications, there remains a strong demand for high performance. PCIe technology will continue to deliver a cost-effective, high-bandwidth, and low-latency I/O interconnect to meet industry needs."
Worldwide data center capacity will increase by 46% over the next two years, equivalent to a jump of almost 21,000 megawatts, as demand surges.
