U.S. Utilities Sector Analysis

Plus, inside the Q2 mid-cap stock surge, jobs data ahead, and are refinery stocks a buy after a dip? AI stocks are among the most vulnerable to higher bond yields, one analyst says. Ionis Pharmaceuticals, Shake Shack among the worst-performing stocks last week. The AI age is expected to require scaling data centers, grid capacity, and supply chains. Access more insights for the aerospace and defense, chemicals and specialty materials, engineering and construction, industrial manufacturing, mining and metals, oil and gas, power and utilities, and renewable energy sectors. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities.

Analyst Commentary Recent Street research on Constellation Energy shows a mix of optimism about long term clean power demand and caution around valuation, regulatory outcomes, and large customer projects such as data centers. This contract points to American Electric Power Company committing capital and operational attention to a relatively new generation technology at sizeable scale, which could influence future capacity planning, fuel choices and grid reliability. While the use of fossil fuels, such as coal and natural gas, may continue to incrementally decline, renewable energy could be a key area of growth to bridge this supply and demand power gap. These contracts can provide long-term visibility on earnings and growth for corporate leaders in the utilities sector. With a 3.3% dividend yield and earnings growth expected to exceed management’s outlook, this 4-star stock stands out in a struggling sector. Having enacted enabling legislation.66 This shift rewards outcomes—capacity delivered, reliability, affordability—rather than gross capital deployed, and can create space for coinvestment, securitization, and service-based contracts.

They will face growing pressure to keep firm capacity projects on schedule, reduce curtailment, and lower costs. His focus areas include utility generation and distribution, gas transmission–related midstream activities, and storage, as well as nuclear generation, independent power production, and renewable energy. The S&P 500® index is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. As power demand increases from further electrification of the U.S. power grid, efforts to onshore manufacturing and, especially, the proliferation of AI, utilities companies could experience a once-in-a-generation period of growth.

• What’s Changed for PG&E Previously, large data center demand was framed around a 10 gigawatt pipeline driving load growth through 2027 to 2029.
• In 2025, rising load forecasts and shrinking capacity margins prompted utilities and regulators to emphasize near-term reliability alongside long-term planning.
• To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
• From my perspective, the dramatic shift in power demand is likely to be a multiyear trend that will drive utilities sector growth for years to come.
• Institutional advisory services are provided through Fidelity Institutional Wealth Adviser LLC (FIWA), a registered investment adviser.

Outlook for 2026: More growth projected

This exposure to AI, the most powerful trend driving the equity market over the past two to three years, gave utilities—in particular, electric utilities and independent power producers—a performance edge during the past year.​ For investors, one of the most attractive features of utility companies is their typically steady and predictable cash flows, which can become a source of income for shareholders through dividend payments. Amid this uncertain environment, utilities were an attractive investment for many investors. Equity market volatility spiked in the early months of 2025, largely due to a dramatic shift in U.S. trade policy, including the imposition of new tariffs, by https://www.lemonfiles.com/62776/details-glary-utilities-portable.html the incoming Trump administration. To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Undervalued Stocks to Buy Before the Market Shifts Again

• This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or its and their affiliates are, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services.
• Amid this uncertain environment, utilities were an attractive investment for many investors.
• EPS is expected to grow by 27% over the next 3 years, which should provide support to the dividend and adequate earnings cover.
• Analyst Commentary Recent Street research on Xcel Energy points to a more cautious tone on valuation while still recognizing execution on capital plans and regulatory progress.
• That requires analytics and automation to drive capital and operational efficiency—creating the foundation to scale their AI deployment.
• The emphasis will then shift to storage duration and diversity, with long-duration energy storage (LDES) advancing from pilots to procurement.

In 2026, the challenge for utilities will be quickly delivering uninterrupted or “firm” capacity to stressed parts of the grid.7 Customer affordability will remain a central pressure point as retail prices continue to rise. The energy mix is shifting toward renewables, which accounted for 93% of new capacity through July 2025, with solar and storage making up 83%.4 But the pace of connecting these new energy sources has lagged. In tandem with Deloitte’s energy, resources, and industrials leadership, she drives energy research initiatives and manages the execution of the center’s strategy as well as its eminence and thought leadership. Upcoming Dividend • Aug 24Upcoming dividend https://www.riverstonenetworks.com/planning-for-retirement-your-savings-goal.html of US$0.39 per shareEligible shareholders must have bought the stock before 31 August 2026.

The dividend has increased by an average of 3.2% per year over the past 10 years and has been stable with no material reductions to payments, indicating a long track record of dividend growth and stability. Sustainability & Growth Dividend is covered by earnings (57% earnings payout ratio) but the company has no free cash flows available, indicating it may be using cash reserves or debt to pay the dividend. The dividend has increased by an average of 6.8% per year over the past 10 years and has been stable with no material reductions to payments, indicating a long track record of dividend growth and stability. Sustainability & Growth Dividend is covered by earnings (71% earnings payout ratio) but the company has no free cash flows available, indicating it may be using cash reserves or debt to pay the dividend. Filter, sort and analyze all stocks to find your next investment. All stocks mentioned in this article as fund holdings were held as of November 30, 2025.

Utilities will pair firm capacity with AI-driven operations, flexible planning, and innovative finance to sustain affordability and reliability under stress. Utilities that set the pace will be those that embed financial, operational, and digital flexibility into their playbooks—delivering capacity where and when it’s needed while safeguarding affordability. Utilities are under pressure to deliver more reliability with the same resources. In 2026, utilities will continue to shift from planning to execution. Electric power companies are pursuing strategies across three horizons, focusing on accredited peak contribution rather than nameplate megawatts.13 In the near term, companies are bridging reliability gaps through incremental firm generation and operational flexibility. The US Department of Energy projects about 104 GW of coal and natural gas retirements by 2030, offset by 209 GW of new capacity.11 Yet only 10% of those additions will be firm baseload, widening the reliability gap (figure 1).12

• The US Department of Energy projects about 104 GW of coal and natural gas retirements by 2030, offset by 209 GW of new capacity.11 Yet only 10% of those additions will be firm baseload, widening the reliability gap (figure 1).12
• This exposure to AI, the most powerful trend driving the equity market over the past two to three years, gave utilities—in particular, electric utilities and independent power producers—a performance edge during the past year.​
• Utilities are under pressure to deliver more reliability with the same resources.
• Nuclear is regaining traction as a long-term anchor for clean, firm capacity.
• Unless otherwise noted, the opinions provided are those of the author and not necessarily those of Fidelity Investments or its affiliates.

References to specific securities or investment themes are for illustrative purposes only and should not be construed as recommendations or investment advice. Unless otherwise noted, the opinions provided are those of the author and not necessarily those of Fidelity Investments or its affiliates. Views expressed are as of the date indicated, based on the information available at that time, and may change based on market and other conditions. Information presented herein is for discussion and illustrative purposes only and is not a recommendation or an offer or solicitation to buy or sell any securities. Unloved but well positioned, this innovative sector may offer long-term drivers and low valuations. Lastly, utilities need to make sure that large AI and industrial customers are paying their fair share, and that retail customers are not forced to subsidize these larger power consumers.

Stocks

This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your finances or your business. Our goal is to draw upon research and experience from throughout our professional services organization, and that of coauthors in academia and business, to advance the conversation on a broad spectrum of topics of interest to executives and government leaders. In 2026, capital strategy is likely to be measured less by gross spend and more by capacity per dollar and bill impact per incremental megawatt. Over the past few years, lead times for critical grid equipment such as transformers and switchgear have stretched to multiple years (figure 3), while equipment and project costs continue to rise. Additionally, utilities are exploring federated learning techniques to improve models across sites while keeping data local, offering a secure path to expand system intelligence.36 Together, this infrastructure can help balance resilience, compliance, and scalability for enterprise adoption.