Daily Brief - Amp Up Your Portfolio

TLDR: Data centers might guzzle up to 9% of the total electricity generated in the United States by the end of the decade - that's more than double their current consumption.

Depending on how quickly new tech like generative AI gets adopted, and how energy-efficient new centers are, the electricity usage of the industry could grow annually by anywhere from 3.7% to a staggering 15% through 2030.

Why is this important? Data centers, along with expanding manufacturing and transportation electrification, are reviving the U.S. electricity industry after two decades of stagnant growth.

These centers need a massive amount of power for computing and cooling, with a single new large data center consuming as much electricity as 750,000 homes. Such an increase in power use could strain the electric grid, potentially leading to higher power bills and even outages.

Since the launch of OpenAI's ChatGPT in 2022, the data center industry has boomed. Early ChatGPT searches needed about 10 times the electricity of a typical Google search, and as generative AI use grows, the power demand is set to skyrocket.

With 5.3 billion global internet users, the widespread adoption of these tools could trigger a significant surge in power demand.

Investment Ideas: Top Stocks to Energize Your Portfolio

Here are a list of US companies involved in the electric utility sector, renewable energy, and energy infrastructure:

1. NextEra Energy (NEE):
2. Duke Energy (DUK)
3. American Electric Power (AEP)
4. Dominion Energy (D)
5. Exelon Corporation (EXC)
6. Edison International (EIX)
7. Brookfield Renewable Partners (BEP)

Market Movers: Response in high inflationary environments

Here is the historical 3-month response from the above stocks when CPI is above 3%:

1. Duke Energy: 2.35%
2. Edison International: 2.33%
3. Nextera Energy: 1.62%
4. Exelon Corp: 1.59%
5. Dominion Energy: 1.45%
6. American Electric Power: 0.90%
7. BROOKFIELD RENEW. (NYS) PARTNERS: 0.38%

Earnings Spotlight: FedEx reports tomorrow

In March, FedEx management maintained their full-year earnings guidance at $17.75 per share, despite reporting fiscal third-quarter sales of $21.7 billion, which fell short of the $21.9 billion estimate and marked a 2.2% decline year-over-year. This shortfall was attributed to businesses reducing their inventory purchases.

However, the outlook for FedEx remains optimistic. Analysts project fourth-quarter sales to reach $22 billion, representing nearly a 1% increase from the same period last year, supported by stabilizing shipping volumes in February. Coupled with ongoing cost-cutting measures, FedEx's earnings prospects appear promising.