The AI Boom Could Be a Bad Reason to Buy Utility Stocks. Try This ETF Instead.
Investors who are bullish on AI might want to avoid this sector.
The AI Boom Could Be a Bad Reason to Buy Utility Stocks. Try This ETF Instead.
Overview
The artificial intelligence (AI) stock boom has brought some surprising benefits to other parts of the economy, not just tech names. Energy stocks have gained from AI demand for electricity. Some construction companies and industrial stocks have also become AI-related stocks because they build data centers. Utility stocks have been another possible play for bullish AI investors.
Exchange-traded funds (ETFs) like the Vanguard Utilities ETF (NYSEMKT: VPU) make it possible to own a targeted portfolio of utility stocks at a low cost. This Vanguard ETF holds 68 utility company stocks and has delivered annualized returns of 14.4% for the past three years. Unfortunately, this fund has strongly underperformed the S&P 500 index and the tech-heavy Nasdaq-100 index year to date and over the past 10 years:
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Source
Originally published at www.fool.com.
