Enthusiasm for artificial intelligence has spread across the stock market.
Wednesday night’s Nvidia (NVDA) earnings call will mark one year since the chipmaker first shocked Wall Street with its demand for AI chips. Since then, mentions of AI have skyrocketed in the earnings data, growing 186% since the first quarter of 2023, according to Bank of America Research.
This is because the conversation around AI has quickly shifted from AI chip makers like Nvidia (NVDA) and AMD (AMD) to AI power users like Alphabet (GOOG, GOOGL), Meta (META), Amazon (AMZN) and Microsoft ( MSFT). More recently, strategists have pointed to a broadening to other sectors that could benefit from increased energy consumption, such as energy (XLE), utilities (XLU) and commodities.
“It’s not just about NVDA anymore,” Ohsung Kwon, an equity strategist at U.S. and Canadian Bank of America, wrote in a note to clients on Monday.
This shift is already happening in the market. Several precious metals, including copper (HG=F), which strategists say will benefit from AI spending, have hit recent highs. The utilities and energy sectors are two of the best performing sectors in the S&P 500 (^GSPC) this year, up about 15% and 13%, respectively.
This has trickled down to individual names that are now competing with Nvidia’s meteoric stock rise since early 2024. Texas-based Vistra Corp (VST) is up about 140% this year, while shares of Constellation Energy (CEG) are up almost 90% . %, which is roughly in line with Nvidia’s increase this year.
In a note on Sunday, Morgan Stanley Chief Investment Officer Mike Wilson named utilities as an overweight sector, noting that it offers “advantages over the AI power theme.” Wilson highlighted that Morgan Stanley’s Power and Utilities team believes electricity could rise from 3% of total US consumption in 2023 to around 10% in 2030, powered by new AI data centers 50 times the size of previous ones .
“Both traditional and alternative energy suppliers have upside revision potential amid the increasing need for AI data center power and more favorable data center power deals,” Wilson wrote.
And companies are also playing their part in the AI expansion.
Research from Goldman Sachs’ equity strategy team led by David Kostin shows that mentions of AI soared in the first quarter. More than 66% of energy sector companies mentioned AI on their earnings calls this quarter, compared to 19.1% last quarter.
Given the major implications, investors will be closely watching Nvidia’s color report on AI chip demand.
So far, Nvidia has repeatedly surprised investors on this front, consistently beating analyst expectations for quarterly results and boosting its outlook for the coming quarter amid robust demand for its AI servers.
Whether this trend continues or breaks could now impact several sectors.
“If the markets wake up and say, ‘Hey, maybe we got a little too excited about this and maybe we pulled out some of these gains a little bit,’ and that’s reflected in the valuations,” he said. global market of JPMorgan Asset Management. Strategist Jack Manley told Yahoo Finance: “I think you have the potential for a bit of a shaky road there.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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