Forget Nvidia. This ETF Could Be the Next Big Winner From the AI Boom
David Dierking, The Motley Fool
Tue, August 25, 2026 at 12:40 PM GMT+3 4 min read
Nvidia has been the face of the artificial intelligence (AI) boom. But everybody already knows that.
They also know about Microsoft, Alphabet, and Micron Technology. They've all been huge winners already. Investors are now looking for the next big AI winner. But it might not be the one they expected.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Artificial intelligence needs enormous amounts of electricity. And the Vanguard Utilities ETF (NYSEMKT: VPU) could offer investors a different way to profit from the AI boom.
AI has an enormous power problem
Building an AI model requires advanced semiconductor chips. Running those chips requires data centers. And data centers require staggering amounts of electricity. That's quickly becoming one of the industry's biggest constraints.
For example, Nvidia just agreed to provide more than $100 billion to support OpenAI's new Ohio data center project. The site is expected to reach 8 gigawatts of capacity eventually. That's an enormous amount of power from a single data center. But it's becoming an increasingly common trend.
AI companies can buy all the GPUs they want. But those chips aren't going to be particularly useful without enough electricity to run them.
Utilities could become unlikely AI winners
That's where the Vanguard Utilities ETF enters the picture.
This ETF owns roughly 70 stocks, including NextEra Energy, Southern Company, Duke Energy, Constellation Energy, and American Electric Power. Those companies generate, transmit, and distribute the electricity that an expanding network of data centers will require.
Utilities have traditionally been viewed as slow-growing income investments. But electricity demand from AI could improve the sector's growth prospects.
More data centers mean greater demand for capacity, grid upgrades, and other infrastructure. Utilities that can successfully invest in that expansion could potentially grow their earnings faster than investors have historically expected from the sector.
There's one big risk to the narrative
More electricity demand doesn't automatically mean enormous profits for utilities. These companies are highly regulated, and there can be restrictions on how much they return on capital investments.
Of course, there's also the public pushback from people who don't want data centers in their communities. The Vanguard Utilities ETF isn't cheap by historical standards either. Investors have already begun to recognize the potential growth opportunity.
Would I buy VPU for the AI boom?
Yes, but not as a replacement for Nvidia and other tech stocks. The Vanguard Utilities ETF currently offers a dividend yield of roughly 2.7%. Investors receive current income while gaining exposure to a sector that could see years of rising electricity demand.
I wouldn't replace semiconductor or technology exposure in my portfolio, though. The Vanguard Utilities ETF provides a different type of exposure and can augment traditional tech coverage.
The biggest winners from AI won't necessarily be just the companies designing semiconductor chips. The infrastructure underneath the ecosystem can be just as valuable. Before another AI data center can generate a single dollar of revenue, somebody has to power it.
Should you buy stock in Vanguard Utilities ETF right now?
Before you buy stock in Vanguard Utilities ETF, consider this:
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David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Constellation Energy, Micron Technology, Microsoft, NextEra Energy, and Nvidia. The Motley Fool recommends Duke Energy. The Motley Fool has a disclosure policy.
Forget Nvidia. This ETF Could Be the Next Big Winner From the AI Boom was originally published by The Motley Fool
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