The AI gravy train for power stocks is over. Investors will now focus on who’s getting paid, strategist says.

The broad-based rally in utility and power stocks, fueled by speculative enthusiasm over AI's escalating electricity demands, is drawing to a close. According to strategists, the market is moving past the general narrative of burgeoning power consumption to a more granular assessment of which companies are actually cashing in on the AI infrastructure boom. This signals a maturation of the AI investing theme within the energy sector, pushing investors to demand concrete evidence of financial returns rather than just projected demand. Historically, the prospect of increased data centers and AI computing spurred widespread optimism across the utility sector. However, the investment landscape is evolving. The new focus necessitates identifying specific power generators and infrastructure providers that are demonstrably securing contracts, developing new capacity, or already profiting from the unique requirements of AI operations. Generic exposure to utilities solely on the basis of AI-driven demand will likely yield diminishing returns as capital flows toward more targeted and financially robust opportunities within the space. For investors, this shift means a deeper dive into company financials and strategic partnerships. The emphasis will be on firms with transparent revenue streams linked to AI, efficient capital allocation for expansion, and strong balance sheets. The next earnings cycles will be critical in differentiating between companies merely exposed to AI growth and those actively capitalizing on it, setting the stage for a more selective period for power sector investments.