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A recent poll asking investors to rank the 11 S&P 500 sectors by excitement would likely place technology near the top and utilities near the bottom, according to a report from Yahoo Finance. That traditional view is shifting, however, as the evolution of artificial intelligence gives utility stocks a new appeal, refreshing exchange-traded funds such as the Vanguard Utilities ETF.
This $9 billion ETF should not be mistaken for a conventional tech fund or one focused solely on the broad AI investment theme. Still, as AI technology drives exponential increases in power demand, the Vanguard fund presents an interesting option for investors seeking non-tech AI exposure. The fund allocates 62.4% of its portfolio to electric utility stocks, which is significant because data centers consume massive amounts of power.
Quantifying the power demands from AI and cloud computing data centers is straightforward. Last year, these facilities consumed 448 trillion watt-hours of electricity worldwide, surpassing the power consumption of all but ten countries. The portion consumed in the United States points to an opportunity with sector funds, including this Vanguard ETF.
A May report from the Energy Information Administration underscores the AI-related opportunity. The EIA noted that 2026 power consumption will exceed last year’s level, and that increase will be repeated next year. Of note for investors considering utilities exposure is that in 2027, commercial power consumption will surpass residential consumption for the first time, which the report attributes to AI.
Whether this makes the fund one of the best Vanguard ETFs remains to be seen. However, with AI fostering new demand and residential electricity prices expected to rise this year and in 2027, this utilities ETF has the opportunity to deliver more growth than investors anticipate.
While AI enthusiasm is widespread, it can also create confusion. In culinary terms, the utilities fund is more of an AI nibble than a buffet, offering a measured exposure to the trend rather than a full serving.
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