Investors
looking
for
the
next
way
to
play
the
artificial
intelligence
boom
should
consider
some
of
the
basic
building
blocks
of
the
economy,
according
to
Bank
of
America.
Investment
and
ETF
strategist
Jared
Woodard
said
in
a
note
to
clients
last
week
that
the
market
is
underestimating
the
changes
brought
about
by
the
energy
demand
of
AI
programs.
“‘Round
one’
winners
from
new
tech
demand
like
data
centers,
hyperscalers,
and
chip
makers
are
well-owned
already,”
Woodard
said.
“Further
investments
in
those
beneficiaries
should
be
made
contingent
on
a
realistic
path
to
expand
the
power
supply.
In
other
words,
the
big
new
digital
darlings
can
still
win,
but
the
ruddy
old
real
world
may
have
to
win
first.”
The
shift
toward
the
next
round
may
have
already
started.
Utility
stocks
have
started
to
rally
in
May,
with
the
Utilities
Select
Sector
SPDR
Fund
(XLU)
up
8%
month
to
date.
The
fact
that
utility
stocks
are
cheaper
than
the
rest
of
the
market
and
have
long
underperformed
helped
fuel
the
move,
but
the
prospect
of
increasing
energy
demand
also
appears
to
have
been
a
factor.
XLU
1M
mountain
Utilities
stocks
have
risen
sharply
in
May.
Woodard
identified
other
ETFs
and
stocks
that
could
benefit
from
increased
energy
consumption
and
investment
in
the
electric
grid.
One
is
the
Direxion
Auspice
Broad
Commodity
Strategy
ETF
(COM)
.
This
fund
is
pricier
than
many
equity-focused
ETFs,
with
a
net
expense
ratio
of
0.70%,
but
offers
actively-
managed
exposure
to
12
different
commodities,
from
soybeans
to
oil
to
copper.
It
is
up
about
8%
this
year.
Bank
of
America
also
has
a
buy
rating
on
mining
stock
Freeport-McMoRan
,
which
is
already
up
more
than
27%
year
to
date.
“Progress
is
not
possible
without
real
assets.
Our
strategists
expect
metals
like
copper
to
fall
into
massive
deficits
through
2026.
Miners
should
retain
pricing
power
given
constrained
capacity
after
a
decade
of
underinvestment,”
the
Bank
of
America
note
said.
Companies
that
help
produce
sources
of
energy
could
be
another
area
in
which
to
find
winners.
The
VanEck
Oil
Services
ETF
(OIH)
is
a
fund
that
Woodard
highlighted.
Its
top
holdings
include
SLB
and
Halliburton
.
Uranium
could
become
more
important
as
a
fuel
source
in
the
years
ahead.
Bank
of
America
is
positive
on
the
Global
X
Uranium
ETF
(URA)
,
which
offers
exposure
to
both
physical
uranium
and
miners.
“Uranium
is
in
its
third
secular
bull
market
as
global
supply
cannot
keep
up
with
growing
demand.
A
10%
nuclear
‘uprate’
could
add
10GW
of
energy
supply
without
any
new
building,”
the
note
said.
The
URA
has
a
net
expense
ratio
of
0.69%
and
is
up
about
18%
year
to
date.
The
OIH
is
cheaper
at
0.35%
and
is
up
roughly
6%
on
the
year.
Bank
of
America
did
not
include
a
utilities
ETF
in
the
note,
but
the
firm
has
a
buy
rating
on
Xcel
Energy,
among
such
stocks.
—
CNBC’s
Michael
Bloom
contributed
reporting.
