Turn on the Lights to the Utilities Spending Boom With This ETF

Domestic for-profit utilities are spending big to meet the artificial intelligence (AI) demand moment. Regulatory Research Associates estimates that from 2026 through 2030, U.S. utilities will shell out a staggering $1.3 trillion to meet AI-related demands while enhancing reliability and modernizing power grids. With that comes significant investment implications and opportunities. However, not all AI ETFs are adequately positioned to capitalize. The ALPS Electrification Infrastructure ETF (ELFY) is.

ELFY, which turned a year old in April, isn’t a dedicated utilities ETF. That said, it allocates 35.67% of its portfolio to that sector. That indicates that its credibility as a complement to broad market funds with scant utilities exposure. By emphasizing the electrification infrastructure theme, ELFY provides efficient exposure to the utility stocks with credible leverage to that theme. That’s a vital attribute against the backdrop of soaring, AI-induced spending.

Data centers and efforts to reshore manufacturing jobs are propelling utilities sector spending. That could spell long-term opportunity for ELFY investors. “Data centers, along with other large industrial loads such as new manufacturing facilities, are fueling the need for new power supplies through 2035, adding 374 TWh of energy demand and over 45 GW of peak load,” noted S&P Global Market Intelligence . Potentially adding to the long-term potency of ELFY, utilities spending focuses on more than just AI. As some experts point out, power grids across the U.S. direly need refreshing, as a matter of national security. Some ELFY member firms are leading that charge. “Capex programs are targeted at infrastructure modernization to enhance grid reliability and resiliency, alongside a significant build-out of new generation and transmission capacity to meet continuing data center growth and the need to connect to new resources,” added S&P.

Another benefit offered by ELFY: the potential for outperformance of standard utilities strategies. Helped by significant exposure to industrial and energy stocks (more than 45% of the ETF’s portfolio), the ALPS ETF is up more than 22% year-to-date. That represents about six times the returns offered by a typical benchmark utilities ETF.