Buy Big Tech and Utilities Stocks Now

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[00:00:04] Doug McIntyre: Lee, you’ve told me a lot, you’ve talked a lot on our show about the, the marriages that you’ll see between the big users of ai, the Microsofts of the world. And utilities because AI is so electricity hungry that you can’t just tap into the grid when you’ve got an AI server farm and say, well, we’re gonna flip on the switch.

[00:00:25] Doug McIntyre: And suddenly, yeah, right. Eric Schmidt said that in 10 years, 99% of the electricity use in the United States is gonna be AI. So I think that you saw what may be the seminal deal that that really kicks this off in the meta constellation.

[00:00:43] Lee Jackson: Yeah, I think it’s huge because, you know, Constellation’s a, a big player in their utility business anyway, but the plant that, that they’re going to work with Microsoft on, and it’s in, um, I think Illinois or it’s, it’s in the Midwest there.

[00:01:00] Lee Jackson: And, this is a huge deal. It was like a $7 billion deal or, and something of, of that, you know, aspect. And you’re gonna see more of this, you’re gonna absolutely see more of this. And the big utility companies are smart. And then what’s gonna happen is the grid is gonna get so stressed that what’s gonna eventually be the case is down the road is more nuclear will come online.

[00:01:24] Lee Jackson: And well, yeah,

[00:01:25] Doug McIntyre: And I can see the big utility company saying, look, we’re gonna build you your own mini grid. Yep. Okay. You bring us the business, we know how to do this. We’ll put together the energy source and we’ll put together a mini grid. We’ll keep you off the national grid.

[00:01:44] Lee Jackson: Right. And I, I think that’s exactly the idea then.

[00:01:46] Lee Jackson: That’s what they floated.

[00:01:48] Doug McIntyre: Right. So for those of you who don’t know, there are three grids in the United States. Two are together, put together the last one, which is I think parts of Texas is not

[00:01:59] Lee Jackson: No, that’s the ERCOT that is in Texas. Yeah.

[00:02:01] Doug McIntyre: So I love big utilities right now, not just because of deals like this, which is basically a deal that’s still tapped into the, to the national grid.

[00:02:13] Doug McIntyre: I can see big utilities in essence becoming blue ribbon suppliers of AI data centers that are on their own where they will build a wind facility, a solar facility, nuclear, maybe. Some of it is fossil fuels, but they say, look. Microsoft, if you wanna do this out on the open, uh, electricity, uh, market.

[00:02:39] Doug McIntyre: If you, if you wanna use the grid as it is now and you want to try to call up all your utility friends and say, well, we’re gonna use the existing electricity generation you’ve got now, please just put in a few extra wind turbines. No. To me, the reason that I love utilities right now is what I will describe as a private label grid.

[00:03:03] Doug McIntyre: Yep. Okay. It is the Meta-Constellation grid.

[00:03:10] Lee Jackson: And that will be the first of many I bet.

[00:03:12] Doug McIntyre: If I am in the AI server farm business I am looking for was what are in essence private off the grid arrangements. Meta said they would spend $75 billion this year on AI. Amazon (NASDAQ: AMZN) numbers 50 billion.

[00:03:33] Doug McIntyre: It’s not stagger.

[00:03:35] Doug McIntyre: it’s not like you’re gonna have a capital problem. Okay. You don’t have a capital problem. No. If you’re a utility and you can make this work for one of these guys, you’re solving what I think is their biggest problem. They’ve got the chips, they’ve got the servers. They’ve got the clients.

[00:03:52] Doug McIntyre: None of that is a problem. What they don’t have is they don’t have the energy source.

[00:03:58] Lee Jackson: Plus, if we can take some of the stress off the existing grid. Which as we know is, is, you know, put together with probably duct tape, bailing wire, and chewing gum. If we, if taking stress off the grid, will, will be a twofold, uh, positive.

[00:04:17] Lee Jackson: And one thing that is totally different from this, but Doug, more likely than not, by September, the Fed will be ready to cut rates. Now, what stocks work good if the Fed stocks cutting rates, utilities, because they’re, they’re a dividend play. So you, you get it. You get a lot of reasons to own ’em like you’ve been talking about.

[00:04:36] Doug McIntyre: Well, it’s also one of the few classes of shares right now where you’ve got the opportunity for the stock to go up. ’cause we’ve entered a new age. I would describe this as the new age of utilities. The fact that you’ve got AI server farms and the yield. So you very rarely are in a period where you can look at a sector and say, I can buy those stocks.

[00:04:59] Doug McIntyre: They can actually go up a lot, which did not happen to utilities for decades. And in addition to that, I’m getting, I, these guys are probably, what, three or 4%? Most of them. So I get a three or 4% return on the stock that if they make an announcement like this could go up 20%.

[00:05:20] Lee Jackson: Well Constellation over the last say 18 months is up huge, you know, and, and again, we’re just starting to scratch the service.

[00:05:30] Lee Jackson: Of how this will work down the road. So yeah, I mean, again, if you’re trading, you know, tech stocks, it’s maybe not your bailiwick, but boy, for everybody else, especially, you know, the more conservative investors that we know that are looking for a little bit of growth, their growth and income investors, I think it’s a great space to be in.

[00:05:50] Lee Jackson: And it’s at a good year. But, you know, you pick your poison and there’s, and the good thing is there’s a ton of utility stocks, whether it’s energy or you know, any number of other good companies, you know,

[00:06:05] Doug McIntyre: Dominion (NYSE: D) Oh, okay. Okay. But

[00:06:06] Lee Jackson: here’s Florida Power and Light. There’s a million of them that are in the areas that are gonna need that extra energy.

[00:06:12] Doug McIntyre: I’m gonna disagree with you a little. I’m gonna say buy pairs. Okay. By the tech company and the utility. Oh. Oh, I think that’s good. I’m Is pair them up. Okay. Yeah. Well, if in my portfolio I’m gonna, I’m gonna say Microsoft and Entergy (NYSE: ETR) I, I’m gonna start to pair them up because I know that if one successful in this sector, the other is going to be successful.

[00:06:39] Lee Jackson: Yeah. Investor that’s risk tolerance. I don’t, I think that’s a very good idea. I’m just speaking more in general terms. I know.

[00:06:49] Doug McIntyre: Listen, but what I wanna say to everybody who’s listening in right now is consider buying in pairs.

[00:06:56] Yeah, that’s a good idea.

[00:06:57] Doug McIntyre: You buy a mega tech that’s gonna be in AI, and you buy utility.

[00:07:03] Doug McIntyre: Be strategic. You know? Yep. Look at areas where there could be a need for server farms or where there likely to be built. Do your research, but

[00:07:16] Lee Jackson: Yeah, it’s a good idea. I’m gonna credit that to you when it’s a huge winner.

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