Americans are paying 13% more for energy since January 2025, when President Donald Trump took office. While strained household budgets feel the pinch, investors eyeing the energy sector could see a surprising benefit as we move into the new year.
Unlike discretionary spending, which shrinks when times get tough, utilities—think heat and electricity—are essential. That makes rising rates a potential revenue booster for companies in the sector.
Why America’s Utility Bills Are Surging
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The utilities sector is currently underperforming, but a confluence of factors suggests a potential turnaround in 2026.
The utilities sector is limping into 2026, having posted a more than 3% loss over the past month—the worst performance among all 11 sectors in the S&P 500. But a shift may be coming. Americans are facing substantially higher electric bills due to slowing renewable energy production, increased costs for fossil fuels, and the ever-growing demand from AI data centers.
The Trump administration’s focus on reviving the fossil fuel industry has led to a slowdown in permitting for renewable energy projects. This has resulted in the delay or cancellation of nearly 25,000 megawatts of planned electric power production.
To put that in perspective, the White House has effectively stalled enough electricity generation to power 13.17 million homes, according to a report released by Climate Power earlier in December.
Climate Power also found that natural gas prices have risen 98% since Trump took office. This is a concern, as the U.S. Energy Information Administration data shows that natural gas accounts for over 43% of all U.S. electricity generation.
Meanwhile, the surge in demand for AI data centers is pushing rates higher across the country. This trend has coincided with triple-digit gains for some AI stocks in 2025, and utility stocks are beginning to capitalize on the increased electricity demand.
That’s potentially good news for long-term investors. AI data centers currently consume 4.4% of all U.S. electricity, but that figure is projected to grow to between 12% and 20% by 2030.
Gas and electric utilities have already raised or sought to increase bills by more than $85 billion, impacting consumers in 49 of 50 states.
Until AI data centers are powered by independent sources, this growing electricity consumption is likely to drive gains in the utilities sector, potentially benefiting shareholders of the First Trust Utilities AlphaDEX Fund.
Diving Into the First Trust Utilities AlphaDEX Fund
While many investors gravitate toward large-cap utility companies or broad sector ETFs, the First Trust Utilities AlphaDEX Fund takes a different approach.
The ETF aims for higher growth potential by including a wider range of companies and tracks the StrataQuant Utilities Index. This index selects holdings from the Russell 1000—an index that contains twice as many companies as the S&P 500.
The index also ranks stocks based on growth and value factors, including three-, six-, and 12-month price appreciation, one-year sales growth, cash flow, and return on assets.
The result is a portfolio of utility stocks with high growth potential, balanced allocations, a manageable 0.63% expense ratio, and a dividend yield of $1.03 per share.
The fund’s balanced approach means no single holding accounts for more than 5% of the portfolio. Currently, its top position is weighted at 4.83%, while its 10th largest holding is weighted at 3.42%.
This approach reduces concentration risk. Over the past year, while the XLU S&P 500 utilities sector ETF gained 11.35% year-to-date (YTD) in 2025, trailing the broader market, the FXU has gained 17.65% YTD, outperforming both the S&P 500 and the Russell 1000.
What Wall Street Thinks About the FXU
The FXU has an average daily trading volume of just 256,355 shares, compared to 22.32 million shares for the XLU.
However, this hasn’t deterred institutional investors. Over the past 12 months, they’ve invested more than $610 million into the fund, with outflows limited to just $183 million. Short interest currently stands at a minimal 0.25% of the FXU’s float.
Because ETFs aren’t rated like individual stocks, sentiment toward the underlying companies is key. Based on 329 analyst ratings of the companies within the ETF’s portfolio, the fund receives a Moderate Buy rating.
