With the AI boom still underway, investors have plenty of different ways to play the trend. After the big rallies in many chip stocks and big-tech names over the past few years, 2025 may be the year to think more defensively.
Markets are showing some signs of exhaustion going into the start of the year. And bond yields are tracking higher at a time when they should be trending lower. One group of stocks can benefit from the rise of AI safely.
That area is electric utilities. Historically a slow-growth play offering investors some steady income, utilities can benefit from the rise of power-hungry data centers running AI programs.
One such player is Entergy (ETR), a Louisiana-based utility, which should benefit from increased data centers in the years ahead.
Currently, shares are a value play, trading at about 18 times earnings. If the AI rollout can increase demand, Energy could also become a growth play, and today’s investors will get the defensive play of a utility with some AI growth potential thrown in.
Action to take: Investors may like shares at current prices or on any market decline. Entergy also pays a 3.2% dividend at current prices.
For traders, the June $80 calls, last trading for about $2.70, could see mid-to-high double-digit returns depending on how far shares trend higher in the first half of the year.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.