Wolfe Research recommends sticking with the utilities sector despite a recent dip in performance, as it continues to outperform the broader S&P 500 for the year. Analyst Steve Fleishman highlights Entergy, NiSource, and American Electric Power as key players benefiting from data center expansion and strong earnings growth. The firm believes the sector’s ‘winners keep winning’ trend will continue.
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Investors should continue favoring stocks within the utilities sector, despite a recent slowdown in its rally, according to Wolfe Research. While the S&P 500 sector only added just over 2% in April – compared to the broad index’s 10% gain – it’s still up more than 8% for 2026, outpacing the S&P 500’s roughly 5% increase.
“Investor dollars hurried back into tech and growth sectors and out of defensive utilities,” Wolfe senior analyst Steve Fleishman noted in a Sunday report. However, utilities “remain 400bps ahead of the market for the year.” Fleishman believes the sector’s success is driven by a “winners keep winning” dynamic.
Key Performers:
- Entergy: Leading the sector with a year-to-date climb of over 27%. The company announced a deal with Meta in March and raised its long-term forecast. Fleishman projects a compound annual growth rate for earnings of 13% between 2026 and 2030, which he calls “unheard of” for a regulated utility.
- NiSource & American Electric Power: These companies are also showing upside from capital expenditures, benefiting from exposure to states and regulators supporting data center expansion. NiSource and American Electric have risen more than 15% and 17% respectively this year.
Analysts polled by LSEG generally have a buy rating on these stocks, with price targets suggesting potential gains of around 4% for Entergy and over 5% for American Electric and NiSource over the next 12 months.
