There are many companies competing to produce AI chips, yet every AI chip fundamentally requires electricity to operate.
Artificial intelligence is just a fancy computer program
When examined, artificial intelligence is essentially a sophisticated software system that demands substantial computing power. While Nvidia’s current leadership in AI chips may not endure, the essential requirement for reliable electricity across all AI hardware remains unchanged.
This represents a pick‑and‑shovel investing approach, reminiscent of the gold‑rush era when profits came from supplying equipment rather than directly extracting resources. The probability of a specific miner uncovering a valuable find was uncertain, and the same uncertainty applies to AI chip manufacturers.
Even if the AI gold rush falls short of expectations, electricity will remain a critical global resource. Investing in electricity equities provides a resilient position: returns are positive whether AI thrives or underperforms, making them advantageous under adverse scenarios.
Consequently, I hold positions in Brookfield Renewable Partners (NYSE: BEP), Southern Company (NYSE: SO), and Black Hills (NYSE: BKH). These companies have delivered dependable dividends over many years—Black Hills, a Dividend King with more than 50 consecutive annual increases—and provide appealing yields. Brookfield Renewable focuses on clean energy, aligning with a broader global trend.
A one-stop shop to benefit from AI’s power demands
For investors seeking a single utility exposure to AI‑driven power demand, NextEra Energy (NYSE: NEE) presents a compelling option. The company manages an extensive regulated utility operation and is among the world’s leading producers of solar and wind energy, effectively offering the combined benefits of Southern and Brookfield Renewable in a single investment.
NextEra Energy offers a dividend yield close to 3%, surpassing the utility sector average of roughly 2.6%, and has a long track record of annual dividend growth, making it an attractive pick‑and‑shovel play for income‑focused investors. Additionally, the firm is currently pursuing the acquisition of Dominion Energy (NYSE: D), further strengthening its position as a leading utility and underscoring its commitment to meet the world’s expanding electricity demand.
Should you buy stock in NextEra Energy right now?
Before you buy stock in NextEra Energy, consider this:
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