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Utilities have traditionally been known for their defensive properties, which makes the combination of robust economic growth, technological excitement and elevated bond yields an unlikely recipe for their strong performance. That said, the sector’s 23% gain kept pace with the broader market last year. In 2025, this momentum should continue. After two decades of stagnant power demand, the electrification of the U.S. economy and the intense power needs of generative artificial intelligence should prompt demand to inflect higher. Additionally, with our aging grid infrastructure and more frequent extreme weather events, finding enough capacity to provide adequate electricity supply won’t be easy. These themes, and others, should highlight winners across the utilities sector. For investors looking to diversify tech exposure, utilities could offer an attractive way to invest in the many themes driving markets today, but with a very different wrapper.

To share what she’s seeing across the utilities sector, Gabriela Santos, my new co-host, will be joined by Teresa Kim, a utilities-focused equity research analyst here at J.P. Morgan Asset Management.

Resources:

Subscribe to the Notes on the Week Ahead podcast for more insights from Dr. David Kelly: Apple Podcasts | Spotify

I was running along the roads of our neighborhood last weekend when I came upon a small herd of deer. I often see these beautiful but dopey creatures at dawn as they wander aimlessly in the middle of the road. When a car or truck bears down on them, they stop and stare. Perhaps they are pondering whether it would be more fun to hop into the woods to their right or gambol off into the field to their left. But, of course, the only important decision is to get out of the road. A “wait and see” attitude could be fatal.