This ETF Outperforms the S&P 500: A Straightforward Approach to Investing in AI and Earning Passive Income from High-Yield Stocks.
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 30 2025
0mins
Should l Buy ORCL?
Source: Fool
S&P 500 and Utility Sector Performance
- Current Market Status: The S&P 500 index is up 9.9% year-to-date, but the utility sector, represented by the Vanguard Utilities ETF (VPU), is outperforming it.
- Vanguard Utilities ETF Overview: The VPU offers a diversified investment in the U.S. utility sector, primarily in electric and multi-utilities, with a low expense ratio of 0.09% and a yield of 2.7%.
Sector Performance Insights
- Outperforming Sectors: In 2025, five sectors are expected to outperform the S&P 500: industrials, communication services, utilities, technology, and financials.
- Defensive Nature of Utilities: Typically, utilities are seen as defensive investments during market uncertainty, contrasting with the cyclical nature of sectors like industrials and financials.
Impact of AI and Energy Transition
- AI's Influence on Utilities: The utility sector is experiencing growth due to investments in AI and the energy transition, with major tech companies expanding cloud infrastructure.
- Electricity Demand Projections: The U.S. Energy Information Administration (EIA) forecasts a 2.2% annual increase in electricity sales for 2025 and 2026, driven by AI and data center growth.
Regional Demand Increases
- ERCOT and PJM Demand Growth: The EIA predicts a 7% increase in electricity demand in Texas (ERCOT) for 2025 and 14% for 2026, while PJM Interconnection is expected to see a 3% increase in 2025 and 4% in 2026.
- Utility Companies Benefiting: Utilities like Southern Company, Dominion Energy, and American Electric Power are positioned to benefit from these demand increases.
Renewable Energy Investments
- Infrastructure and Energy Mix: The buildout of infrastructure for data centers will require both renewable energy and fossil fuels, with utilities investing heavily in renewables to meet sustainability goals.
- Corporate Sustainability Goals: Companies like Amazon and Microsoft are making significant investments in renewable energy, with Amazon achieving 100% renewable electricity for its operations in 2023.
Investment Opportunities
- Indirect AI Investment: The Vanguard Utilities ETF presents a way for investors to gain exposure to AI-driven demand for energy without the volatility of high-growth stocks.
- Long-term Growth Potential: The steady increase in energy demand, coupled with AI's requirements for higher power capabilities, supports a positive investment thesis for the utility sector.
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Analyst Views on ORCL
Wall Street analysts forecast ORCL stock price to rise
34 Analyst Rating
25 Buy
9 Hold
0 Sell
Moderate Buy
Current: 149.010
Low
180.00
Averages
309.59
High
400.00
Current: 149.010
Low
180.00
Averages
309.59
High
400.00
About ORCL
Oracle Corporation offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud. The Company operates through three businesses: cloud and license, hardware and service. Its cloud and license business is engaged in the sale, marketing and delivery of its enterprise applications and infrastructure technologies through cloud and on-premise deployment models including its cloud services and license support offerings, and its cloud license and on-premise license offerings. Its hardware business provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments. Its services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Conference Call Details: The company will host a conference call and live webcast at 4:00 p.m. Central Time on the same day to discuss the financial results in depth, enhancing communication with shareholders.
- Investor Relations Platform: The live webcast will be available on Oracle's Investor Relations website, further improving the company's accessibility and information sharing capabilities among investors.
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- Conference Call Details: The company will host a conference call and live webcast at 4:00 p.m. Central Time on the same day to discuss the financial results in depth, enhancing communication with shareholders.
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See More
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- Increased Capital Expenditures: Major hyperscalers like Alphabet, Amazon, and Oracle are turning to the bond market to finance their significantly increased capital expenditure plans, a shift that may alter market perceptions of their financing strategies and affect their future financial flexibility.
- Market Absorption Capacity: Bob Michele, CIO at JPMorgan, noted that despite rising bond issuance, the market has the capacity to absorb this debt, as historical precedents show that it can differentiate between good and bad borrowers, influencing investor decision-making.
- Investor Strategy Adjustments: Guy LeBas from Janney Montgomery Scott anticipates a 9% to 11% growth in the investment-grade corporate bond market by 2026, suggesting strong ongoing demand for bonds, prompting investors to reassess their portfolios in light of the upcoming debt supply changes.
See More
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Investor Concerns: Investors may soon discover which companies are truly at risk from the rise of artificial intelligence.
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- Surge in Enterprise Demand: Anthropic's business now derives 80% from enterprise customers, with an annual revenue run rate nearing $20 billion, up from $14 billion just weeks ago, indicating strong demand and potential market leadership in the enterprise AI sector.
- Regulatory Risk: The Trump administration's designation of Anthropic as a supply chain risk after it refused the Pentagon's terms has led to defense contractors dropping its technology, which could significantly impact customer trust and market share.
- Shift in Technology Reliance: As the government scrutinizes Anthropic, companies are reassessing their reliance on a single AI provider, with many evaluating multiple vendors simultaneously to mitigate risks, potentially altering the supply chain dynamics across the industry.
- Legal Challenges and Brand Impact: Anthropic plans to contest the government's supply chain risk designation legally; while its brand has benefited from consumer safety concerns, ongoing legal battles may affect investor confidence and the pace of market expansion.
See More
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- Rising Electricity Pressure: Average residential electricity prices in the U.S. increased by 6% in 2025, contrasting Trump's promise to halve prices during his term, highlighting the government's challenges in controlling energy costs, which could impact his support in the midterm elections.
- Implementation Challenges: The decentralized nature of electric grid regulations across states poses significant hurdles for the Trump administration in converting the pledge into actionable policy, with experts indicating that new federal legislation is necessary to address power supply shortages.
- Increased Political Pressure: Trump is leveraging his political influence to pressure tech companies into absorbing the costs associated with their data centers, despite the complexities arising from state-level regulation of power generation, which may complicate policy implementation.
See More
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- Supply Chain Risk Declaration: The Trump administration's designation of Anthropic as a supply chain risk has prompted 10 startups working with the Department of Defense to cease using its Claude model and seek alternatives, potentially impacting about 80% of Anthropic's enterprise revenue.
- Defense Contract Implications: Major defense contractors like Lockheed Martin are expected to remove Anthropic's technology from their supply chains, which could lead to a decline in Anthropic's market share within the defense sector and adversely affect future revenue growth.
- Legal Response Possibility: Anthropic has indicated it may appeal the supply chain risk designation through legal channels, although no formal action has been taken yet; if the designation becomes official, it would restrict the use of Claude in defense contracts, potentially affecting its business with other clients.
- Market Reaction and Alternatives: Several defense tech firms are proactively transitioning their workforce away from Claude to other models, and while Anthropic's product is regarded as excellent, the reliance on it for defense contracts is now under scrutiny, posing challenges for its continued use in sensitive environments.
See More
