If I were to ask you which stock has led the S&P 500 this year, you may be tempted to think of a red-hot technology pick that’s benefiting from the AI Boom… like NVIDIA Corporation (NVDA).
But you’d only be partially right.
The fact is that the S&P 500’s current top performer actually comes from the utility sector – but it is benefiting immensely from the AI Boom.
I won’t keep you in suspense… I’m talking about Vistra Corp. (VST).
For the year, Vistra has gained roughly 235%. That is significantly higher than the runner-up, NVIDIA, which has gained 180%.
Now, you may be thinking… What does a utility company have to do with the AI Boom?
It’s simple, really.
AI needs power. A lot of it.
For example, according to the World Economic Forum, it took about 1,300 megawatt hours (MWh) of electricity to train OpenAI’s language model, GPT-3. This is similar to the power consumption of 130 U.S. homes annually.
The more advanced GPT-4 model may have taken 50 times more than that. And it’s estimated that the overall computational power needed for maintaining AI’s growth is doubling every 100 days.
According to estimates from Boston Consulting Group, AI will account for 16% of America’s energy consumption and reach 130 gigawatts by 2030.
It’s hard to even comprehend how much power we’re talking about. So, this has led to some big deals in unexpected places to meet this crazy demand.
For example, on September 21, Microsoft Corporation (MSFT) inked a deal with Constellation Energy Corporation (CEG) to revitalize the Three Mile Island nuclear plant in Pennsylvania.
As part of the terms, Constellation will spend $1.5 billion to bring one of the plant’s reactors back online, which is expected to be completed by 2028. In return, Microsoft will pay a “significant” premium over market rates to secure the power to meet the demands of its data center buildout as part of the 20-year deal.
If you’re not old enough to remember, this is the same plant where a partial meltdown in 1979 led to a nationwide slowdown in adopting nuclear as an energy source.
Then, on Wednesday, Amazon.com, Inc. (AMZN) announced a $500 million investment into nuclear power. Specifically, the company signed an agreement with Dominion Energy, Inc. (D) to explore the development of Small Modular Reactors (SMRs). SMRs have long been seen as a critical step in deploying nuclear power at a larger scale. These advanced reactors are much smaller, cheaper, take less time to build and can be built closer to the grid.
In other words, AI is single-handedly revitalizing the nuclear power industry.
But this begs the question… Why nuclear?
Well, naturally, Big Tech would prefer that this power be as clean as possible.
There’s just one problem: Wind and solar just aren’t going to cut it.
These AI data centers run complex operations that need continuous and uninterrupted power. That means they need a reliable base-load power source that can provide electricity consistently, regardless of external conditions (like weather or time of day).
Matthew Garman, CEO of Amazon Web Services (AWS), sees nuclear power as the best bet over traditional power sources to meet demand:
We see the need for gigawatts of power in the coming years, and there’s not going to be enough wind and solar projects to be able to meet the needs, and so nuclear is a great opportunity.
The Top S&P 500 Stock of 2024
This is where Vistra comes in.
Vistra is an integrated retail electricity provider based in Texas. It happens to be the largest power generator in the U.S., with a capacity of approximately 39 gigawatts, supplied by diverse energy sources such as natural gas, nuclear, solar and battery storage facilities.
Back in March, Vistra completed a previously announced $3.4 billion deal to acquire Energy Harbor, making Vistra the second-largest nuclear power provider in the U.S. The company owns the Moss Landing Power Plant in California which contains the largest battery energy storage system in the world.
I should also add that since the bulk of Vistra’s operations are in Texas, it benefits from the ability to set prices based on market factors instead of having to deal with regulators.
Now, I used my Stock Grader system to point my premium subscribers to Vistra back in March. And since then, it has gained 140%! It currently has a Quantitative Grade of A, signifying strong institutional buying pressure – so as long as that remains the case, I expect the gains to continue.
Where AI Is Headed Next
It just goes to show you that, while I love NVIDIA, it isn’t the only game in town. The AI buildout is happening at a massive scale right now, and there are plenty of other stocks that are benefitting from it.
But I predict that in the coming days, we’re going to see a critical shift in the AI Boom.
You see, many folks are still pouring their investments into the “first generation” of AI stocks, like NVIDIA, for example.
But we’re going to start seeing a shift where “next-gen” AI stocks become the new market leaders.
These second-generation AI stocks will be smaller companies using AI that will either create entirely new businesses or upend existing ones.
And thanks to my Stock Grader, I found six next-gen AI companies that are already doing just that. This is your chance to get into the once-in-a-lifetime shift that could create millionaires. It all begins with just a small stake in the right investments.
I recently sat down for a briefing that tells you everything you need to know. But you’ll need to act fast because my briefing is being taken down TONIGHT at midnight. So, you don’t want to miss it.
Sincerely,
Louis Navellier
Editor, Market 360
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Microsoft Corporation (MSFT), NVIDIA Corporation (NVDA) and Vistra Corp. (VST)
