Dear readers,
On Friday we wrote that the U.S. labor market had handed the service economy another quarter of runway — that 115,000 new jobs and a 4.3 percent unemployment rate were keeping the American consumer employed and spending. That consumer resilience still holds. But the market’s attention is drifting from who’s spending to what’s being built, and the answer is an extraordinary amount of electrical infrastructure.
The S&P 500 closed Friday at 7,398.93, up 0.84 percent. The Nasdaq Composite finished at 26,247.08, gaining 1.71 percent. Those are record closes. And the companies leading the charge aren’t the ones most investors associate with the AI trade.
Utilities Are the New Growth Stocks
For decades, utility stocks were the place you parked money when you wanted yield and boredom. That era is ending. The sheer volume of electricity required to train and run large language models has turned regulated power companies into something resembling high-growth equities — complete with long-duration contracts that would make any SaaS CEO jealous.
NiSource (NYSE: NI) announced new and expanded partnerships with Amazon and Alphabet last week, deals structured to deliver $1.4 billion in customer savings over 15 years. On the strength of that pipeline, NiSource raised its adjusted EPS growth forecast through 2033 to 9–10 percent annually. A utility guiding to double-digit earnings growth nearly a decade out is not something the market has seen before.
Vistra Corp. (NYSE: VST) posted first-quarter 2026 results that read more like a hyperscaler than a power generator: record EBITDA of $1.5 billion, up 20 percent year-over-year, on revenue of $5.6 billion — a 43 percent increase. The TIKR valuation model now places a price target near $190, implying 29 percent upside from current levels. And NorthWestern Energy is pursuing a merger with Black Hills Energy for a reason that would have been incomprehensible five years ago: to serve 14 planned data center projects in Montana.
The Physical Buildout Reaches a New Scale
The facilities themselves are getting enormous. PowerHouse Data Centers, working with Provident Data Centers, is developing a 1.8-gigawatt campus in Grand Prairie, Texas — a facility so large it would have ranked among the biggest power plants in the state a generation ago. The Texas grid operator ERCOT has already approved the first 500-megawatt tranche, and the first building on the 1,900-acre site is scheduled to come online this month.
Akamai Technologies (NASDAQ: AKAM) jumped 27 percent after disclosing a $1.8 billion, seven-year cloud infrastructure contract with Anthropic — the largest deal in the company’s history. That a content delivery network built for web traffic is now a critical node in AI infrastructure tells you how far the physical buildout has spread beyond the usual suspects.
And where compute scales, heat follows. Vertiv (NYSE: VRT), which supplies cooling systems for AI architectures as an Nvidia partner, saw its stock rise 31.1 percent in April. After a strong quarter, the company lifted its full-year net revenue guidance to $13.5–$14.0 billion, up from a prior range of $13.25–$13.75 billion, and now expects midpoint adjusted EPS of $6.35.
The Cost Squeeze Hitting Everyone Else
The infrastructure winners are creating losers. Zoho founder Sridhar Vembu offered a blunt assessment: server prices have risen 200–300 percent within the past year. Tech-sector layoffs, he argued, are increasingly driven not by weak demand but by exploding AI infrastructure costs — companies are spending heavily on hardware while the revenue from AI-powered products hasn’t materialized at the same pace. ByteDance is responding by raising its AI investment budget by at least 25 percent, a move driven primarily by surging memory chip prices rather than expanded ambition.
The energy cost picture adds another layer of pressure. The ongoing Iran conflict and the closure of the Strait of Hormuz since late February continue to strain global oil supply. Brent crude closed Friday at $101.29 per barrel. Citi analysts see a risk of $120 oil within the next zero-to-three months. Goldman Sachs has flagged what it calls a dangerous drawdown rate in global petroleum reserves. U.S. gasoline prices have already pushed past $4.50 per gallon. For companies that consume vast quantities of electricity but don’t own the generation assets, the margin math is getting progressively worse.
Froth Warnings and a Bitcoin Milestone
Goldman Sachs is using pointed language about the broader market. The bank characterized the S&P 500’s move above 7,100 as “froth,” suggesting bubble-like conditions in parts of the index. The Fed, holding rates at 3.50–3.75 percent, shows no inclination to provide relief.
Bitcoin crossed $80,000 over the weekend — a notable recovery from the pressure we described on Friday, when the oil shock had pushed it below that level. Institutional holdings via spot ETFs now total $59.38 billion. The crypto market’s next focal point is May 14, when the CLARITY Act — legislation that would establish a regulatory framework for digital tokens — goes before the Senate Banking Committee for a vote.
The Week Ahead
CPI and PPI data land in the coming days, and the question they’ll answer is straightforward: are persistently elevated energy prices feeding through into broader inflation? If they are, the Fed stays frozen, borrowing costs remain high, and the divide between companies that own physical AI infrastructure and companies that merely rent it grows wider.
On Friday we described the resilience of American domestic demand as the load-bearing wall of this market. That wall is still standing. But the weight being stacked on top of it now includes $100 oil, 200-percent server price increases, and an equity market that Goldman Sachs is openly calling frothy. The companies pouring the concrete and stringing the power lines for AI’s physical layer are capturing an outsized share of the gains. Everyone else is paying the bill.
I hope you enjoy the rest of your weekend.
Best regards,
The StocksToday.com Editorial
