Powering the AI Boom: Two Utility Giants Poised for Growth

The utility sector, long viewed as a defensive harbor for investors, is experiencing a jolt of growth. The Vanguard Utilities Index Fund ETF has climbed over 11% in the past year, a notable rally for this stable corner of the market. Analysts point to an insatiable new source of power demand: the artificial intelligence revolution. Data centers, the physical engines of AI, require massive, reliable electricity, positioning regulated utilities at the center of a transformative infrastructure build-out.

This AI-driven power surge is still in its early innings, promising to fuel earnings growth for well-positioned operators for years. For investors looking to capitalize, two names stand out this February: NextEra Energy (NYSE: NEE) and Dominion Energy (NYSE: D).

NextEra Energy: The Renewable Powerhouse
NextEra operates a dual engine: the nation's largest electric utility, Florida Power & Light, and a world-leading clean energy developer, NextEra Energy Resources. The company is coming off a robust 2025, with adjusted EPS growth exceeding 8%, fueled by Florida's population boom and strong renewable demand. It brought 8.7 gigawatts of new generation and storage online last year, while its development arm secured a record 13.5 GW of new projects, swelling its backlog to 30 GW.

This pipeline underpins a confident long-term outlook. Management expects EPS to compound at over 8% annually through 2035, supporting a planned 10% dividend hike this year, followed by 6% annual increases in 2027 and 2028. With a current yield around 2.5%, NextEra is positioned to deliver potential annualized total returns north of 10%.

Dominion Energy: Fueling the Data Center Capital
Dominion serves as the primary power provider in Virginia and the Carolinas, a region now dubbed the world's largest data center hub. The utility is the industry leader in connecting these facilities, currently supporting 450 in Virginia alone. Statewide power demand leapt 30% last year, and Dominion is in discussions to supply up to 47 GW to data centers—a 17% year-over-year increase in potential load.

To meet this wave, Dominion has embarked on a massive $50 billion capital investment plan for 2025-2029, heavily focused on Virginia. A centerpiece is the $11.5 billion Coastal Virginia Offshore Wind project (50% funded by partner Stonepeak), on track to begin production this quarter and deliver nearly 3 GW of clean power by early 2027. These investments are forecast to drive 5%-7% annual EPS growth. Coupled with a dividend yield above 4%, which management intends to maintain, Dominion also offers a pathway to double-digit total annual returns.

The Bottom Line
NextEra and Dominion are strategically positioned to be primary beneficiaries of the AI era's infrastructure needs. Their combination of regulated earnings growth, substantial capital investment programs, and shareholder-friendly dividends creates a compelling case for strong total returns, redefining the investment profile of the utility sector.

Investor Perspectives:

Michael R., Portfolio Manager (Boston): "This isn't your grandfather's utility play. The AI demand story provides a visible, multi-decade growth runway that fundamentally changes the sector's risk-reward profile. NextEra's renewable backlog and Dominion's geographic advantage are concrete assets."

Sarah Chen, ESG Analyst (San Francisco): "It's a nuanced story. NextEra's leadership in renewables is a major plus for forward-looking portfolios. Dominion's offshore wind project is commendable, but investors must scrutinize the balance sheet strain from its $50 billion spend and its ongoing fossil fuel generation."

David P., Independent Investor (Online Forum): "Are we serious? This feels like a hype-driven pivot to justify soaring valuations. Utilities are becoming capital-intensive, debt-laden proxies for tech. That 4% yield from Dominion is a trap if interest rates spike or construction costs balloon. The 'AI power demand' is being used to gloss over huge execution risks."

Linda G., Retired Teacher (Florida): "As a long-term NEE shareholder, I've appreciated the steady growth and dividend. This new AI demand just seems to solidify the company's future. It's reassuring to see my income investment also having a clear growth driver."