Wells Fargo Identifies Its Favorite Sector Beyond Technology
Wells Fargo strategist Scott Rehn says the current market rally extends far beyond artificial intelligence, pointing to industrials and utilities as sectors poised to benefit from the infrastructure and energy boom fueled by AI’s rapid growth.
AI’s Ripple Effect on Traditional Sectors
Rehn emphasized that the AI revolution has created ripple effects across the economy, particularly for sectors responsible for the physical backbone of digital expansion — power, data centers, and logistics. “Long before AI dominated headlines, the U.S. power grid was in dire need of modernization,” Wells Fargo noted in its latest report. “Now, with AI data centers consuming massive amounts of power, those upgrades have become urgent.”
“These energy-intensive infrastructures have created a sea change,” Rehn wrote. “They’ve pushed the power grid modernization debate to the forefront of both political and industrial agendas.”
Industrials and Utilities in Focus
Wells Fargo’s strategy team believes industrials and utilities will lead the next leg of market growth. Companies in these sectors are expected to build new data centers, modernize transportation systems, and expand energy capacity to sustain AI infrastructure. The bank’s note cites a McKinsey & Company estimate that $7 trillion will be spent globally by the end of the decade on “data centers, computing power, and semiconductors.”
AI Spending Multiplier Effect
Wells Fargo also referenced Blackstone’s analysis suggesting that for every dollar spent on AI, another three dollars will flow into supporting infrastructure — from power and cooling systems to fiber networks. This multiplier effect could extend the AI rally to sectors traditionally viewed as defensive.
A Long-Term Structural Trend
“We are at the start of a multi-year transformation,” Rehn said. He predicts that industrial and utility companies will experience steady demand as AI reshapes how power is consumed, transmitted, and managed across the U.S. Wells Fargo’s conclusion: “Industrials and utilities are our preferred sectors beyond technology.”
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