| The artificial intelligence boom has driven both demand for power and interest from investors looking to cash in. That’s made utility analysts unexpectedly popular. Josh Saul writes about how they’re adapting. Plus: 10 companies to watch in the third quarter, and why celebrities are becoming telecom entrepreneurs. If this email was forwarded to you, click here to sign up. Julien Dumoulin-Smith used to be able to board a plane during business hours. He covers utilities, a sector long seen as safe and predictable. “Sleepy,” he says of the former workflow. Not anymore. The boom in power demand kicked off by artificial intelligence has driven investors so wild that utility analysts like Dumoulin-Smith are finding themselves in hot demand. Now when he travels to meet investors, the Jefferies analyst settles into an Uber instead of a plane so he can stack up 20-minute client calls on his three phones while driving from New York to DC or between cities in Texas, rather than risk several hours out of touch. “It’s evolved to a point where I can’t get off the phone all day.” For decades, the demand for electricity in the US barely budged, growing by less than a single percentage point each year. That’s changed in a big way thanks to the power needs of AI data centers, new factories and the electrification of everything from cars to heating. Data center power demand is set to double by 2035, to almost 9% of all US demand, according to BloombergNEF. Some project it will be the biggest surge in US power demand since air conditioning caught on in the 1960s.  The sun sets on power lines near Sweetwater, Texas. Photographer: AP Photos That growth has meant a lot of money flowing into the companies that sell power. The S&P utilities index is up more than 40% from October 2023, as generative AI mania boomed. Independent power producers like Constellation Energy Corp. and Vistra Corp., which sell wholesale electricity and aren’t regulated like utilities, have seen even bigger jumps. All that money means utility analysts—Wall Street’s guides to an industry that can be maddeningly complex—have seen their profiles rise from the overlooked opening acts of the analyst world to headlining rock stars. Until recently, utilities were mostly the purview of dividend investors who have long held the stable-if-boring shares just to pocket reliable payments, says Travis Miller, a utility analyst at Morningstar. Now, it’s a lot of growth investors who see the potential for big increases in earnings. Other analysts say their usual “utility mafia” clients—industry slang for those who only look at the sector—have been joined by eager tech, industrial and global investors. Utility conferences are suddenly packed as institutional investors, mutual funds and other asset managers try to pick up a basic education on how regulator decisions or extreme weather can affect the industry. Sophie Karp, a utility analyst at KeyBanc Capital Markets, says a colleague who covered retail unsubscribed from Karp’s research notes before the AI boom, claiming they were too technical. “There was no sexy story there,” Karp says. Today, “it’s definitely going full speed.” As the sector heats up, Barclays utility analyst Nicholas Campanella says he now does five or more hours of calls a day, instead of the three from when he started about a decade ago. Friday is his busiest day, with client calls back-to-back from 7:30 a.m. to 4 p.m. and a 15-minute break to run to the cafeteria and grab food. And that’s on top of the “real job” of actually analyzing companies, he says. Luckily, Campanella’s tastes align with the current high-speed pace. “I’m a big premade sandwich guy,” he says. Analysts agree the big turning point arrived in early 2024 when Talen Energy Corp. struck a deal to sell nuclear power to Amazon.com Inc. “That was a lightning rod of attention,” Dumoulin-Smith says. Investors went from thinking of electricity as an abundant commodity to seeing that it could be both scarce and capable of fetching premium prices. Of course, the historic rise in power demand has implications far beyond the rising prestige of utility analysts (or power traders, for that matter, who have also been in hot demand). Critics warn data centers, in particular, pose threats to the reliability of US power grids, have added billions of dollars in costs borne by homes and businesses, and hurt climate efforts by extending the lives of carbon-emitting coal and gas plants. And even though the emergence of Chinese startup DeepSeek’s more efficient chatbot in January briefly triggered a bit of a US utility selloff, the doom and gloom quickly lifted for the sector, with the S&P utilities index once again approaching record highs. “It’s unusual to be so popular, but given the outlook for the sector, it makes sense,” Morningstar’s Miller says. —With Naureen S. Malik | 
