Artificial intelligence enthusiasm is spreading across the stock market, with Nvidia’s (NASDAQ:NVDA) upcoming earnings call being highly anticipated. It marks a year since Nvidia first surprised Wall Street with its strong AI chip demand. Since then, mentions of AI have surged by 186% on earnings calls, according to Bank of America Research.
This AI conversation has expanded beyond AI chipmakers like Nvidia and AMD (NASDAQ:AMD) to major AI power users such as Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Meta (NASDAQ:META), Amazon (NASDAQ:AMZN), and Microsoft (NASDAQ:MSFT). Recently, strategists have noted the broadening impact to sectors like Energy, Utilities, and Commodities.
“It’s not just about Nvidia anymore,” Bank of America US and Canada equity strategist Ohsung Kwon wrote in a client note on Monday.
This shift is evident in the market, with several precious metals, including copper, hitting recent highs. The Utilities and Energy sectors are among the top performers in the S&P 500 this year, up about 15% and 13%, respectively.
Individual companies are also experiencing significant gains, rivaling Nvidia’s stock rise in 2024. Texas-based Vistra Corp (NYSE:VST) is up roughly 140% this year, while Constellation Energy (NASDAQ:CEG) shares have risen nearly 90%, aligning with Nvidia’s growth.
In a Sunday note, Morgan Stanley’s chief investment officer Mike Wilson listed Utilities as an Overweight sector, citing its potential benefits from the AI power theme. Wilson noted that electricity’s share of total US consumption could increase from 3% in 2023 to about 10% by 2030, driven by new AI data centers.
“Both traditional and alternative energy providers have upside revisions potential amid the increasing need for AI data center power and more favorable data center power deals,” Wilson wrote.
Companies are emphasizing their roles in the AI buildout. Goldman Sachs’ equity strategy team, led by David Kostin, found that AI mentions soared in the first quarter. Over 66% of companies in the Energy sector mentioned AI during their earnings calls this quarter, up from 19.1% last quarter.
Investors will closely watch Nvidia’s report for insights on AI chip demand. Nvidia has consistently exceeded analyst expectations for quarterly results and boosted its outlook amid strong AI server demand.
Whether this trend continues could have significant implications across various sectors.
“If markets wake up to say, ‘Hey, maybe we got a little bit too excited about this and maybe we pulled forward some of these earnings just a little bit,’ and that’s reflected in those valuations,” JPMorgan Asset Management global market strategist Jack Manley told Yahoo Finance, “that’s where I think you have the potential for a bit of a shaky road.”
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