Capturing the AI-Driven Energy Revolution: Why Vanguard Utilities ETF (VPU) Is a Once-in-a-Decade Buy

The artificial intelligence (AI) revolution is reshaping global energy demand, creating a seismic shift in how electricity is generated, distributed, and consumed. As data centers become the backbone of the digital economy, their insatiable appetite for power is poised to redefine the utilities sector. For investors, this presents a rare opportunity to capitalize on a structural growth trend through the Vanguard Utilities ETF (VPU), a low-cost vehicle with direct exposure to the companies best positioned to meet the surging demand for electricity driven by AI.

The AI-Driven Surge in Electricity Demand

According to the International Energy Agency, global data center electricity consumption is projected to double by 2030, reaching 945 terawatt-hours (TWh) annually-equivalent to 3% of global electricity use. This growth is accelerating at an unprecedented pace: from 2024 to 2030, data center electricity demand is expanding at 15% annually, outstripping growth in all other sectors. In the U.S., the impact is even more pronounced. The U.S. Department of Energy estimates that data centers could account for 6.7–12% of total electricity consumption by 2030, with usage surging by 325–580 TWh from 176 TWh in 2023. By 2035, Deloitte projects U.S. AI data centers alone could require 123 gigawatts of power-a thirtyfold increase from current levels.

This demand is driven by the rapid adoption of AI technologies. A Deloitte survey found that 79% of executives believe AI will significantly increase power demand through 2035. Accelerated servers, which underpin AI workloads, are expected to grow at 30% annually, accounting for nearly half of the net increase in global data center electricity use. The implications for the energy sector are clear: utilities must expand generation capacity, upgrade transmission infrastructure, and secure long-term power supply agreements to meet this demand.

VPU's Strategic Position in the Energy Transition

The Vanguard Utilities ETF (VPU) offers a diversified, cost-effective way to participate in this transformation. With a 0.09% expense ratio and holdings in 69 U.S. utility companies, VPU includes major players such as NextEra Energy, Constellation Energy, Southern Company, and Vistra Energy. These firms are already adapting to the AI-driven energy boom. For example, NextEra Energy has partnered with Alphabet to restart the Duane Arnold Energy Center, supplying carbon-free power for Google's AI operations. Similarly, Duke Energy and other utilities are expanding generation capacity and modernizing grids to accommodate data center clients.

The fund's performance underscores its alignment with this megatrend. As of late 2025, VPU has gained 19.9% year to date, reflecting strong investor confidence in the sector's growth prospects. This momentum is set to accelerate as utilities invest heavily in infrastructure to meet AI-driven demand. By 2030, peak electricity demand in the U.S. is projected to grow at an average of 3% annually-far above the 1% rate of the previous two decades.

Navigating Challenges and Seizing Opportunities

While challenges such as grid stress, supply chain bottlenecks, and long interconnection timelines persist, the structural demand for electricity is undeniable. Utilities are also leveraging the energy transition to their advantage. Major tech firms like Microsoft and Meta have secured long-term power purchase agreements (PPAs) with utility providers to ensure reliable, low-carbon energy for their data centers. This trend not only stabilizes demand but also incentivizes utilities to accelerate renewable energy projects, further enhancing their long-term profitability.

Moreover, the U.S. and other nations are prioritizing renewable energy expansion to meet AI-driven demand. While uncertainties remain-such as the pace of technological efficiency gains and fossil fuel reliance in certain regions-the overall trajectory points to sustained growth for utilities. VPU's diversified portfolio mitigates regional risks while capturing the upside of electrification, industrial reshoring, and AI adoption.

A Once-in-a-Decade Investment

The confluence of AI's exponential growth and the utilities sector's critical role in powering it creates a unique investment opportunity. VPU's low cost, broad exposure, and alignment with structural demand make it an ideal vehicle for investors seeking to capitalize on this shift. As data centers become the new industrial engines of the economy, the companies that power them-represented in VPU-stand to benefit for decades.

For those who recognize the scale of this transformation, the Vanguard Utilities ETF is not merely a defensive play but a high-conviction bet on the future of energy.