Why the data center slowdown concern is overblown. Two stocks to buy amid the fear

The concern over a data center slowdown appears to be overstated, according to recent comments from utility CEOs at the EEI conference. Despite fears of a potential downturn, none of the CEOs anticipate a slowdown in electricity growth expectations. This suggests that the demand for power from data centers, which has been a significant driver of growth in the utility sector, remains robust.

This is significant for fund managers with exposure to the utility sector, as it implies that the long-term growth prospects for these companies remain intact. Data centers have been a major source of new electricity demand, driven by the increasing need for cloud computing, artificial intelligence, and other digital services. If the growth in electricity demand from data centers were to slow, it could have implications for utility companies' earnings and valuations.

Fund managers should watch upcoming quarterly earnings reports from utility companies to see if they corroborate the optimistic view on electricity demand. Additionally, they should keep an eye on regulatory developments and trends in data center construction and capacity utilization, as these factors could influence the growth trajectory of the sector. With this context, investors may consider taking advantage of any potential weakness in utility stocks to add to their positions, particularly in companies with strong growth prospects and diversified revenue streams.

Originally reported by cnbc.com. FundNews adds analysis for finance & markets readers.