NVIDIA and Palantir stocks are shaping discussions about the current AI boom. But in 2024, another stock could lead the S&P 500 as the best performer.
• S&P 500 best performer 2024 may not be an AI stock
• Energy sector overtakes AI stocks like NVIDIA
• Energy industry benefits from the AI boom
Artificial intelligence (AI) is revolutionizing not only the tech industry, but also the energy sector. One company that stands out and could even become the S&P 500 best performer in 2024 is Vistra Corp. The electric utility’s shares had already achieved an impressive increase of over 300 percent in November 2024, even temporarily outperforming the AI giants Palantir Technologies and NVIDIA – a surprise for many investors who see AI companies as the driving force of the market.
Vistra Stock: A Winner Outside the AI Industry
Vistra may not at first glance be associated with typical AI stocks like NVIDIA, but the company is benefiting greatly from the increasing demand for electricity driven by the boom in AI data centers. As Goldman Sachs notes, electricity demand over the next few years is expected to grow at the fastest rate since the early years of the 21st century.
The Federal Energy Regulatory Commission’s (FERC) official December 2024 nationwide forecast for U.S. electricity demand increased from 2.8 percent to 8.2 percent growth through 2029. According to a more recent report from Grid Strategies, nationwide electricity demand is even expected to increase by 15.8 percent is forecast by 2029 – that would be the highest increase in several decades. A development that can also be attributed to increased power consumption by data centers.
Growth ahead: Why Vistra could benefit from the AI boom in 2025
Vistra is the largest electricity producer in the United States, with 41,000 megawatts of capacity and a broad mix of gas, coal, nuclear and renewable energy sources. Given the increasing demand driven by the electrification of industries and the proliferation of AI data centers, the company is well positioned to benefit from this trend.
The energy giant sees two potentially important sources of additional electricity demand in the coming years. This includes the proliferation of AI data centers, which could add an additional 35,000 megawatts by 2030, and the electrification of the Permian Basin in West Texas, which could increase electricity demand by 20,000 MW by 2030 through population growth and industrial activity.
Historical data shows that stocks that are the best performers in the S&P 500 one year often continue to rise the following year. It is possible that Vistra could benefit from continued high demand for energy in 2025 – despite strong competition from technology giants like NVIDIA.
Energy sector wins: Can regulatory risks slow the trend?
Vistra shares could rise further, especially if the company were to close a nuclear power deal. However, there could be regulatory challenges here. One example is the FERC’s recent rejection of an agreement between Amazon and Talen Energy that would have allowed the tech giant to purchase power directly from a nuclear reactor. This rejection has somewhat muted the topic of nuclear renaissance through AI data centers. But the basic thesis remains: AI will massively increase electricity demand, and companies like Vistra could benefit greatly from this.
Vistra shares: a good investment?
The best performers in the S&P 500 show that the AI boom goes far beyond technology companies like NVIDIA. Vistra could emerge as the main winner. Experts assume that the share could also benefit from the increasing demand for energy in the coming years. Investors looking to capitalize on the AI boom could find interesting opportunities not only in technology companies like NVIDIA, but also in utilities like Vistra – especially as these companies respond to the growing demand for electricity through new technologies like AI.
Editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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