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Utility stocks fell 10% this past year even as their profits rose 15%
In the year power became the scarcest input in the AI buildout, investors paid less for the companies that sell it. The utilities fund's top holdings fell 9.8% while their net income rose 15%, so the trailing P/E fell from 27x to 21x. The 10-year Treasury yield rising from about 4.0% to 5.1% weighed more than demand: the market is still pricing utilities as rate-sensitive income stocks, not as AI winners.
Three panels: the stock price change over the past year, the change in net income over the trailing 12 months, and the price-to-earnings ratio a year ago and now. The utilities are measured through the ten largest holdings of the sector fund, weighted as in the fund.
It separates the AI power story from the stocks that are supposed to express it. If rates ease, the gap between rising profits and falling multiples is where the move would come from.
The common view: the AI power shortage makes utilities a winner.
The Signal deskTop 10 holdings of the Utilities Select Sector SPDR Fund (59% of the fund), fund-weighted: price down 9.8% over the past year; GAAP net income up 15% (four quarters to Q1 2026 vs the four before); trailing P/E from 27x to 21x. NextEra Energy supplied 57% of the profit increase.
Demand is showing up in the earnings, and the market is not paying for it. Until rates turn, the shortage helps the income statement more than the stock.
From the letters
The Week Ahead: One Company at a Time
This week turns on a few big earnings reports and a French credit rating, and it lands in a market already punishing single companies at a record pace.
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- The TakeThe Bottleneck MovedOctober 21, 2026
- The TakeScarce Power, Capped PriceOctober 19, 2026
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