5 Years from Now, This Sector Will Be the Biggest Winner From the AI Revolution

The artificial intelligence revolution is upon us, and plenty is bound to change in how we conduct ourselves in society. From work to play, the potential applications of AI are seemingly endless, and the rise of large language models has driven a new paradigm around investing and how investors think about the sort of exponential upside this trend can provide.

When most investors look to play surging AI demand, certain companies come to mind immediately. In the semiconductor sector, NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) and its high-performance chips are integral to the rise of this technology. Data center stocks and companies building out AI applications and large language models (mostly big-tech names) are the other obvious candidates.

That said, there is a sector that could be more impactful for investors over the next five years. Here is why utilities stocks could ultimately be the biggest winners from this trade, relative to the likes of NVIDIA and other AI-related high flyers that currently have plenty of future growth priced into their valuations.

Power Is the Hard Constraint

Transmission lines

To run any AI application, an LLM or otherwise, you need chips and data centers. That is well known, and companies like NVIDIA and its peers have surged on the expectation that growth will remain robust and may even accelerate. The true bottleneck on AI’s growth rate, though, boils down to power. Without electricity, chips and data centers are useless. Whether electricity comes from fossil fuels, renewables, or nuclear, there are plenty of utility stocks that look attractively priced given the scale of demand growth ahead.

The numbers tell a compelling story. According to Goldman Sachs Commodities Research, U.S. data center power demand is forecast to more than double to 66 GW in 2027 from 31 GW in 2025, driven by an accelerating buildout of AI infrastructure. The International Energy Agency projects that U.S. data center electricity consumption will grow roughly 130% from 2024 levels by 2030, with AI-focused accelerated servers growing at 30% annually. Meanwhile, a DOE-backed Lawrence Berkeley National Laboratory report estimates that data center load growth has tripled over the past decade and is projected to double or triple again by 2028. That kind of trajectory is extraordinary by any measure.

A notable wrinkle in the power story is the trend of Big Tech exploring direct nuclear partnerships to secure firm power outside the traditional grid. In May 2026, NANO Nuclear Energy and Supermicro signed a non-binding memorandum of understanding to explore integrating NANO Nuclear’s microreactor systems with Supermicro’s AI server and data center platforms. The collaboration targets on-site, grid-independent nuclear power for hyperscale and enterprise data centers. Over the longer term, deals like this could shift some demand away from centralized utility grids toward specialized small modular reactor players. For now, however, the scale of power need is so vast that broad utility infrastructure remains central to any realistic buildout scenario.

The Baseload Reality and the Gas Surge

Renewables remain the long-term goal, but the near-term reality is that Big Tech is leaning heavily on natural gas to fill the firm-power gap. According to company sustainability reports, Google’s emissions jumped nearly 50% over the first five years of its climate commitments, Amazon’s rose by 33%, Microsoft’s by more than 23%, and Meta’s by more than 60%. The cost to build a new combined cycle gas turbine power plant has itself risen 66% in the last two years, per BloombergNEF, yet demand for new gas generation keeps rising because the grid simply cannot wait for renewables to scale.

That dynamic is a two-sided story for utilities. On one hand, regulated utilities are being asked to plan and finance enormous new generation and transmission capacity. On the other, the regulatory framework is actively evolving to support that buildout. FERC issued Order 1920 in May 2024, the commission’s most significant action on transmission planning in more than a decade, requiring transmission providers to conduct long-term regional planning over a 20-year horizon and establishing new standards for cost allocation. Follow-up orders (1920-A in November 2024, and 1920-B in April 2025) have further refined the framework, giving state regulators a stronger voice and accelerating the process. That legislative scaffolding reinforces the investment case for major transmission and generation players.

Evolving Economics Makes This Sector One to Watch for the Long Term

Red arrow heading higher, above three stacks of ascending coins

In practice, the limiting factor for AI capacity has already begun to shift from land and data center construction to megawatts and interconnection queues. That transition flips the locus of scarcity from chips and racks to transmission and generation, directly benefiting utility companies operating at scale in the affected markets.

The valuation signal from the market is already apparent. According to Morningstar, the utilities sector’s average dividend yield has hit an all-time low of roughly 3%, a threshold that signals investors are pricing utilities more like growth stocks than traditional income plays. For context, the Morningstar US Utilities Index was up 19% in 2025 and has surged 70% since its late-2023 low, including dividends. Data center growth is a direct catalyst: at American Electric Power, for example, data centers account for more than 80% of its incremental load, with the company projecting peak demand could increase by 63 GW by year-end 2030 in support of signed energy service agreements.

Why Utility Companies Could Outperform Large-Cap Chips and Data Center Stocks

Person holding a blue microchip in a lab

The core of this thesis is a valuation argument. Semiconductor giants already have years of expected growth reflected in their share prices. Utility companies, historically valued as low-growth, bond-like instruments, face a much lower bar. As power demand transforms from a slow-moving regulated commodity into a structurally scarce resource, the sector’s re-rating could prove substantial. Utilities stocks may become considerably less boring in the years ahead, and that is exactly where the opportunity lies.

Editor’s note: This article was updated to reflect current data center power demand projections from Goldman Sachs and the IEA, verified emissions data from Big Tech sustainability reports, the NANO Nuclear and Supermicro non-binding MOU announced in May 2026, accurate details on FERC Order 1920 and its follow-up orders, and Morningstar data showing the utilities sector’s average dividend yield at an all-time low of approximately 3%.