Utilities are not usually the most exciting part of the market.

They are often viewed as steady, income-oriented names that investors rotate into when uncertainty rises. But in 2026, the sector has started to look more interesting again. This time, the story is not just about defensiveness. It is also about growth.

That combination matters.

On one side, utilities have benefited from the same kind of backdrop that usually supports defensive sectors: geopolitical tension, macro uncertainty, and a more selective tone in equities.

On the other side, they are increasingly tied to a structural demand story that feels much more forward-looking.

Data centers, AI infrastructure, and industrial electrification are all raising the question of who will supply the power needed to support that growth.

For investors who want a simple way to express that theme, XLU, the Utilities Select Sector SPDR Fund, is one of the cleanest vehicles to watch. The ETF tracks the Utilities Select Sector Index and gives targeted exposure to major U.S. utility companies across electric utilities, multi-utilities, water utilities, independent power producers, renewable electricity producers, and gas utilities.

What makes utilities more interesting now is that they are benefiting from two angles at once.

They still attract investors during uncertain periods because of their relative stability. But they are also becoming part of the infrastructure story behind AI. As more data centers are built, electricity demand should continue rising, and that puts utilities back into focus.

That shift matters. Utilities are no longer just a place to hide. They are starting to look like a quieter picks-and-shovels play on AI.

For readers who do not want to pick individual utility stocks, XLU is a useful way to track the broader theme.

It gives exposure to the utilities segment of the S&P 500 and offers a cleaner way to follow the group as a whole. In a sector where regulation, geography, and business mix can vary widely, that makes XLU a practical benchmark.

Of course, the opportunity is not without risks.

Higher electricity demand also means more pressure on grids, more spending on infrastructure, and potentially more regulatory scrutiny. Not every utility company will benefit equally, and sector ETFs like XLU are still more concentrated than broader market funds.

The ETF found a new higher support as the market was pulling back in Mar, around the $43 - 44 level, with this higher support, a higher consolidation range could be found toward the $47 - $48 resistance zone.

Due to the nature of the ETF, we’re unlikely to see prices breaking new highs on a regular basis, but rather it represents an opportunity for one to take positions for a range trade, especially with key supports continuing to hold.

Moving averages continue to point up, with the 20d moving average demonstrating some short-term weakness experienced by the ETF.

Utilities are quietly becoming more important again.

The sector still offers defensive qualities, but now it also has a link to one of the market’s biggest growth themes. Rising power demand from AI and data centers is changing how investors look at utilities.

That does not mean every utility stock is suddenly a growth name. But it does suggest the sector deserves more attention than usual and XLU is one of the simplest ways to track that story.

Hope you have found the above stocks useful 😃

If you have yet to be a part of Joey’s VIP clients in Phillip Securities receiving his Exclusive WhatsApp Broadcast daily, you can check it out here!

Joey and team post Top SG Stock Ideas, Market Updates, Research Reports and training videos on a daily basis at NO additional cost.

Look forward to see you on the inside!

- Joey, Bervyn & Zee

Sources:
1. EIA forecasts strongest four-year growth in U.S. electricity demand since 2000, fueled by data centers. Available at: https://www.eia.gov/pressroom/releases/press582.php
2. State Street® Utilities Select Sector SPDR® ETF. Available at: https://www.ssga.com/us/en/intermediary/etfs/state-street-utilities-select-sector-spdr-etf-xlu


Note that by subscribing to receive any of Joey's training by email, you agree to allow us to send you the training by email. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units in any fund and the income from them may fall as well as rise. If the investment is denominated in a foreign currency, factors including but not limited to changes in exchange rates may have an adverse effect on the value, price or income of an investment. Past performance figures as well as any projection or forecast used in these web pages, are not necessarily indicative of future or likely performance of any investment products. By Accessing this Website and ANY of its pages, you are agreeing to the terms set out ON ALL the following pages as seen below. Copyright © | Joey Choy | All Rights Reserved | Disclaimer | Privacy & Security Policy | Terms and Condition