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Daily Missive

Data Center Energy Demand Fueled Massive Gains for Utility Stocks in 2024

Loading ...Addison Wiggin

January 7, 2025 • 4 minute, 38 second read


AIdata centersnuclear power

Data Center Energy Demand Fueled Massive Gains for Utility Stocks in 2024

~~Frank Holmes, U.S. Global Investors

January 06, 2025

Stocks rallied in 2024, delivering a second consecutive year of gains exceeding 20%, as investors embraced cooling inflation, falling interest rates and the prospect of lower corporate taxes under a second Trump administration. The last time the S&P 500 achieved two or more straight years of +20% growth was during the late 1990s, when the internet boom fueled market optimism.

Much like those high-flying days, 2024 saw tech stocks capture investors’ imaginations. This time, though, it was the promise of artificial intelligence (AI) that drove enthusiasm.

Among the top five best-performing S&P 500 stocks, two (Palantir and NVIDIA) are directly tied to AI, while two others (Vistra and GE Vernova) benefit indirectly through increased energy demand. United Airlines, the fifth-best stock, is reportedly integrating AI to streamline operations like notifications and pilot rebooking, but investor excitement appears largely centered on the recent travel boom and United’s $1.5 billion share buyback program.

Palantir and NVIDIA Ride the AI Wave to Historic Gains

AI dominated headlines and the stock market in 2024, pushing companies like Palantir and NVIDIA to triple-digit growth. Palantir, which specializes in data analytics and AI platforms, saw a massive 340% surge in its stock price, making it the best performing S&P 500 stock of 2024.

Palantir’s work with the Department of Defense has been particularly impactful. Major contracts, such as a $480 million deal for its Maven Smart System and a $401 million follow-on contract for its data-gathering Vantage platform, highlight Palantir’s expanding role in military applications.

Meanwhile, NVIDIA benefited immensely from its position as the dominant supplier of GPUs (graphics processing units). The Santa Clara-based company—whose technology powers data centers around the globe, enabling AI applications and Bitcoin mining—generated a jaw-dropping $35 billion in revenue in the third quarter alone as demand for its hardware has soared. As of January 6, 2025, NVIDIA is the world’s second-largest company by market cap, valued at $3.7 trillion.

Data Centers Boost Demand for Energy

Utilities, the lowest-performing S&P 500 sector in 2023, rebounded strongly in 2024, reflecting a major shift in electricity consumption as AI, electrification and decarbonization drive demand. The Energy Information Agency (EIA) predicts that global electricity use could rise as much as 75% by 2050.

This is good news for providers like Vistra and GE Vernova, the number two and number four best performing S&P 500 stocks of 2024.

Vistra, which joined the S&P 500 in May of last year, saw its stock price skyrocket by 261% in 2024. The company’s natural gas and nuclear power plants are well-suited to meet the reliability and scalability needs of data centers. Strategic agreements with cloud computing giants like Amazon and Microsoft to supply power at premium prices further bolstered its financial performance.

GE Vernova, General Electric’s energy spinoff, also saw remarkable growth in 2024, with its stock rising 150% after going public in April. The company’s gas turbines have seen strong demand as providers seek to address the growing energy needs of data centers. The company’s involvement in renewable energy projects—such as the $2.75 billion wind energy agreement in Australia, signed a year ago—further cements its position as a leader in the sector. GE Vernova has projected sales of $45 billion in 2028, up from previous estimates of $43 billion.

United Airlines Soars with Record-Breaking Performance

United Airlines represented a different investment narrative in 2024: the resurgence of post-pandemic air travel. Shares of the Chicago-based airline soared 135% last year, marking the carrier’s best year ever since going public in 2006.

Air travel surged in 2024, with the Transportation Security Administration (TSA) reporting screening a combined 900 million+ passengers at U.S. airports, the most on record. United capitalized on this trend in 2024 by operating its largest-ever domestic schedule and greatly expanding international routes.

Eye-popping passenger volume certainly turned heads, but it was the company’s massive $1.5 billion share buyback program, announced in October, that truly boosted investor sentiment.

Gold and the S&P 500’s Unusual Correlation in 2024

On a slightly different note, the correlation between gold and the S&P 500 reached an unprecedented 0.91 in 2024, meaning that the two assets moved in tandem almost 100% of the time throughout the year.

As many of you are aware, gold has historically shared an inverse, or low, correlation with stocks. That’s precisely why many investors favor gold. Take a look at the period from the mid-80s to early-90s. Gold prices were largely agnostic to what equity prices were doing, making the metal an ideal diversifier.

Granted, we’ve also seen periods of sustained positive correlation (check out the entire 2000s decade), but we’ve never seen such a strong relationship between the two asset classes as we did in 2024.

So what gives?

First, global central banks have begun a coordinated monetary easing cycle, cutting interest rates to stimulate economic growth. This has created a favorable environment for both stocks (as borrowing costs declined) and gold, which, as a non-yielding asset, has historically thrived when interest rates were low.

Second, geopolitical tensions and economic uncertainty have persisted, driving investor demand for safe-haven assets like gold while also supporting equity markets through increased government spending on defense, cybersecurity and infrastructure.

Third, shifts in asset allocation strategies appear to have played a role. Investors increasingly sought diversified portfolios, blending traditional assets like stocks and bonds with alternative investments such as gold and Bitcoin to hedge against inflation (which, despite falling, remained elevated in 2024). I believe this likely contributed to the tighter correlation between gold and S&P 500 stocks.

Want to learn more about gold’s Fear Trade? Watch the video here!

 


The Ghost of Bastiat

October 6, 2025 • Addison Wiggin

By then the receipts on my desk had arranged themselves into a sort of chorus. I heard, faintly, another refrain—one from Kentucky. In the first days of the shutdown, Senator Rand Paul stood alone among Republicans and voted against his party’s stopgap, telling interviewers that the numbers “don’t add up” and that he would not sign on to another year that piles $2 trillion onto the debt.

That, I realized, is what the tariff story shares with the broader budget theater: the habit of calling a tax something else, of shifting burdens into the fog and then celebrating the silhouette as victory. Even the vote tally made the point: he was the only Republican “no,” a lonely arithmetic lesson in a crowded room.

The Ghost of Bastiat
The Dollar’s Long Goodbye

October 6, 2025 • Addison Wiggin

Senator Rand Paul, (R. KY), who was the sole Republican to vote against a continuing resolution, seems to care about the actual finances of the government. “I would never vote for a bill that added $2 trillion in national debt,” Paul said in various interviews over the weekend.

The $2 trillion he’s referring to is the lesser of two proposals made by the national parties… and would accrue during this next fiscal year.

Oy.

We liked what Liz Wolfe at Reason wrote on Friday, so we’ll repeat it here: “One of the dirty little secrets of every shutdown is that everything remains mostly fine. Private markets could easily replace many federal functions.”

It’s a strange kind of confidence — one where Wall Street soars while Washington goes dark.

The Dollar’s Long Goodbye
A Vote For The Yen Carry Trade

October 6, 2025 • Addison Wiggin

The Liberal Democratic Party victory has sent Japanese stocks soaring, as party President Sanae Takaichi – now set to become Japan’s first female Prime Minister – is a proponent of stimulus spending, and a China hawk. The electoral win is a vote to keep the yen carry trade alive… and well.

The “yen carry trade” is a currency trading strategy. By borrowing Japanese yen at low interest rates and investing in higher-yielding assets, investors have profited from the interest rate differential. Yen carry trades have played a huge role in global liquidity for decades.

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

A Vote For The Yen Carry Trade
Beware: The Permanent Underclass

October 3, 2025 • Addison Wiggin

Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.

Today, unemployment is relatively low, if climbing.

Affordability is much more of an issue. Food, rent, healthcare, and childcare are all rising faster than wages. Households aren’t jobless; they’re stretched. Job “quits” are at crisis-level lows.

In addition to the top 10% of earners, consumer spending is still strong. Not necessarily because of prosperity, but because households are taking extra shifts, hustling gigs, working late into the night, and using credit cards. The trends hold up demand but hollow out savings.

It’s the quiet form of financial repression. In an era of fiscal dominance, savers see easy returns clipped, workers stretch hours just to stay even, and wealth slips upward into assets while daily life grows harder to afford.

Beware: The Permanent Underclass