I'm LongbridgeAI, I can summarize articles.President Trump's State of the Union address shifts the landscape for AI growth and electricity costs, urging companies to build their own power sources. This could impact utilities ETFs, which have seen growth due to rising electricity demand from data centers. However, if major tech firms produce their own power, traditional utilities may face challenges. Infrastructure-focused funds may benefit from the need for new transmission lines and grid connections. The evolving narrative suggests a shift from demand growth to capital spending in the AI electricity sector.
President Donald Trump used his State of the Union address to shift the boundaries of AI growth and the cost of household electricity bills, stating that companies building giant data centers would be forced to pay for, and possibly produce, their own electricity.
"We have an old grid, it could never handle the kind of numbers—the amount of electricity—that's needed," Trump said. "So I'm telling [companies] they can build their own plant; they're going to produce their own electricity." He also said that with the new ratepayer protection pledge, "no prices will go up, and in many cases, energy prices will go down for communities."
This introduces a new variable for ETF investors who were betting on AI-driven electricity demand.
Utilities ETFs: Growth Engine Or Headwind?
Electricity demand from data centers has doubled since 2018 and could triple again by 2028, according to federal estimates.
Utilities ETFs such as the Utilities Select Sector SPDR Fund (NYSE:XLU), Vanguard Utilities ETF (NYSE:VPU), and iShares U.S. Utilities ETF (NYSE:IDU) had risen in anticipation of AI data centers ending years of stagnant electricity demand. All three funds have grown between 16% and 19% over the past year and around 9% each year-to-date.
If hyperscalers such as Alphabet, Inc (NASDAQ:GOOGL), Amazon.com, Inc (NASDAQ:AMZN), and Meta Platforms, Inc (NASDAQ:META) continue to increasingly produce their own power through captive natural gas, nuclear contracts, or renewables-plus-storage, some incremental demand may bypass traditional utilities.
This raises the risk that investors have overestimated how much AI directly boosts regulated electricity sales.
Grid Infrastructure: The Quiet Winner?
However, the problem may not be only about lost electrons but more about new wires.
Even private sector-built power plants need transmission lines, substations, transformers, and grid connections, which are often subject to regulated structures and increase the utilities' rate base. That dynamic could benefit infrastructure-focused funds such as the First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (NASDAQ:GRID) and the Global X U.S. Infrastructure Development ETF (BATS:PAVE).
Trump also indicated that there would be pressure on PJM Interconnection, the U.S.’s largest grid operator, to conduct emergency auctions to facilitate long-term power contracts, indicating that the administration is looking for cost control rather than suppressing the growth of AI. It is important to note that, per an IEEFA report from July 2025, capacity prices in PJM for 2026–2027 have jumped to $329.17 per megawatt-day from $28.92 two years earlier, highlighting supply stress.
For the investor, the AI electricity story may now be evolving from a demand growth theme to a capital spending cycle. Utilities ETFs may still have a role, not necessarily in selling more electricity but in building the infrastructure to deliver it.
In the race to fuel artificial intelligence, the opportunity may not be in who sells the electricity but in who delivers it.
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