In my recent article on the power needed to run artificial intelligence (AI), I wrote how power bills are going up due in part to the additional electricity needed to run AI data centers. I made reference to the 20 percent spike in energy bills in the northeast, but data centers are coming to northern Nevada, too.

The Tahoe-Reno Industrial Center (RTI) is known for having the Tesla Gigafactory. Soon, it will be known for data centers as well. Microsoft has acquired 225 acres within the center and a larger plot in nearby Silver Springs. Apple and Google are expanding their data centers, too. The RTI may become one of the largest data center markets in the world.

Estimates are that these data centers will require a 40 percent increase in Nevada’s electricity usage and consume billions of gallons of water every year. Although companies are racing to build data centers across the world, Nevada is giving tax breaks to build here, including abatements on property taxes for a decade or more. I bet the companies would have come, tax breaks or not. Nevadans should at least know this is happening. Most don’t.

NV Energy will supply power to these data centers. Traditionally utility stocks are steady and provide a good income for shareholders. That has changed. Because of data centers, utilities are in a growth industry. The SPDR Utilities ETF (XLU) is up 12 percent this year after gaining 20 percent in 2024.

The need for power is why Market Vectors Nuclear Energy (NLR) is up 120 percent since 2023. For individual stocks, I like GE Vernova (GEV) and Vistra Energy (VST), although they are volatile and are only appropriate for the speculative portion of a portfolio.

As for the overall market, those analysts with time to check say that 80 percent of S&P 500 companies reported second quarter earnings better than expected. Perhaps Wall Street needs better analysts. Investors are enthusiastic for earnings growth and the expected upcoming cuts in interest rates. Earnings will be growing fast among big-cap AI companies, but anticipation of that is why the stocks are where they are with historically high valuations.

Will other stocks follow suit? Yes, to some degree market participation has already improved. Small-cap stocks do especially well when the Fed lowers interest rates. When rates are lowered will investors decide to take on some risk instead of staying in a money market fund with a falling yield? Eventually, yes. It’s a bull market.

David Vomund is an Incline Village-based Independent Investment Advisor. Information is found at http://www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.