This is today's Morning Brief titled "The Takeaway. " To receive it in your inbox every morning, sign up along with the following: - The chart of the day - What we're watching - What we're reading - Economic data releases and earnings Although Nvidia (NVDA) has dominated the headlines this year, reaching a market cap of over $3 trillion, the AI halo effect has surprisingly benefited another industry: utilities. Typically considered a boring sector with regulated structures dictated by states, power companies are not known for significant growth. However, with the rise of AI and the subsequent demand for power in data centers, utilities have found themselves selling "shovels" into this gold rush, as stated by Sophie Karp, KeyBanc equity analyst. The S&P 500 Utility Index has seen a rally of over 10% this year, placing it behind only Communications Services and Information Technology. Leading the way is Texas power company Vistra (VST), which has more than doubled its value year-to-date, second only to Nvidia (NVDA) and Super Micro Computer (SMCI) on the S&P 500 leaderboard. Constellation Energy (CEG) also ranks high, boasting a nearly 70% gain. Karp notes that despite these gains, power company valuations remain historically attractive, thanks to their consistent earnings. However, there is a potential obstacle in the form of power capacity. Canaccord Genuity's George Gianarikas raised concerns about whether the energy infrastructure needed to support AI growth can be built quickly enough.

If power companies manage to meet the demand, significant progress can be expected. Otherwise, Gianarikas suggests there might be a period of digestion for AI-related hardware, emphasizing the need for action. Karp, on the other hand, dismisses these concerns as more of a timing issue than a major problem. She states that in some regions, capacity is already sufficient, while others may require additional capital investment and time to increase power production. Additionally, utilities may soon benefit from a decline in interest rates, which tends to have an inverse effect on power stock trading. If interest rates decrease before or during the Federal Reserve's eventual cuts, it could provide further opportunities for the sector. Julie Hyman, co-anchor of Yahoo Finance Live, brings you this Morning Brief every weekday from 9 a. m. to 11 a. m. ET. You can follow her on Twitter @juleshyman and read her other stories. Click here for in-depth analysis of the latest stock market news and events impacting stock prices. Read the most recent financial and business news from Yahoo Finance.