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AI, Autos and Inflation Fatigue

By:James Melton

A weekly look inside Luckbox magazine

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AI could be a boon to utility stocks

Often viewed as a quiet segment, utility companies are poised to benefit from the growth of electricity-hungry artificial intelligence. And investors are noticing.

In 2024, the sector emerged as one of the top performers in the S&P 500, just behind the ever-dominant technology and communications sectors.

The world’s leading generative AI platforms rely on heavy doses of electricity, which means rapid adoption of AI is driving increased demand for power. This could create a significant uptick in revenue and profits for utility companies.

Also helping utility stocks:

  • An expectation that the Federal Reserve will soon pivot and start cutting interest rates also helps utility stocks. If that happens, it could make it easier for utility companies to invest in infrastructure and grow their capacity.

  • The looming possibility of a recession in the U.S. During downturns, necessities like electricity and heat are the last to be slashed from the budget. This makes the utility sector attractive when the economy is shrinking.

Collectively, these narratives raised the profile of the utility industry in 2024. Year-to-date, the Utilities Select Sector SPDR Fund (XLU) has appreciated by about 10%. Read the whole story.

Will EVs help save the planet?

In the current edition of Luckbox, we asked two experts with diverging points of view whether electric vehicles will deliver the climate-rescuing results envisioned by the EV industry.


One expert, Albert Gore III, a scion of a political family, is also a veteran in the clean-technology industry and an activist committed to a zero-emission future, in which electric vehicles will be a key component. The other, Mark Mills of the free-market-advocating Texas Public Policy Foundation, is a self-described technology pundit. He thinks the climate-saving potential of vehicle electrification is oversold. But he still thinks EVs are cool. Read the whole story.

Consumers show inflation fatigue

Two key trends shaped Q1 2024 earnings. First, U.S. public companies exceeded profit expectations for the quarter. Second, businesses have passed a significant part of inflation to consumers, who are now showing signs of inflation fatigue.

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The blended average growth rate for corporate earnings in the S&P 500 during the first quarter was approximately 5.7%, according to FactSet. That figure reflects 93% of the companies in the S&P 500 that had reported earnings as of May 17.

However, if corporations continue to achieve robust profits, new data indicates consumer confidence is taking a hit from the ongoing impact of inflation.
Read the whole story.

Read the latest edition of Luckbox magazine here.

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James Melton is managing editor of Luckbox magazine. @JDMeltonWriter

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