Why Power Grids Might Be the Real AI Jackpot (Not What You Think)

The AI Supply Chain You’re Probably Overlooking

Everyone’s fixated on Nvidia chips and data center REITs. But here’s the thing—AI infrastructure has layers, and most people only see the top two.

Think of it like this: Nvidia makes the brains (GPUs), data centers are the buildings that house them. But what powers the buildings? Electricity. And that’s where the unsexy but juicy opportunity lives.

The Nvidia Trade Is Getting Crowded

Nvidia stock is up 25,000% over the past decade and now represents 8% of the S&P 500. Current P/E ratio sits around 55x—expensive on absolute terms, even though it’s below its 5-year average. The real risk? Industry dominance doesn’t last forever. Yahoo dominated search until Google showed up. Nvidia’s lead could erode too.

Meanwhile, data center plays are already baked into prices. Utility stocks? Still flying under the radar.

The Electricity Angle Nobody’s Talking About

Here’s the math that changes everything:

• Between 2000-2020: US electricity demand grew 9%
• Projected 2020-2040: 55% growth (per NextEra Energy)

That’s not a blip. That’s structural. And AI is a massive driver of it.

Data centers are temporary—the demand spike could cool if technology shifts. But power demand? It’s sticky. As long as data centers operate, they consume electricity. That’s recurring revenue for 40+ years.

The Play: Utility ETFs

Two solid options:

Vanguard Utilities ETF (VPU)

• Expense ratio: 0.09%
• Dividend yield: ~2.6%

Utilities Select Sector SPDR ETF (XLU)

• Expense ratio: 0.08%
• Dividend yield: ~2.6%

Both track the same narrative: boring + steady + powered by AI demand. You get diversified exposure across regional utilities without single-stock risk.

The Real Edge

While everyone chases semiconductor hype, you’re collecting dividends from the infrastructure that makes AI possible. It’s the “picks and shovels” play that Buffett would love—essential, predictable, and way less sexy than Nvidia calls.

The AI boom isn’t over. It’s just spreading down the supply chain.