XLU ETF: Safest Bet on AI Power Demand?

The Utilities Select Sector SPDR Fund (XLU) offers indirect AI exposure by owning the power grid infrastructure that data centers depend on. With $24.4 billion in assets, a 0.08% expense ratio, and a 2.61% dividend yield, the fund holds 35 utility stocks including NextEra Energy and Constellation Energy. XLU returned 16.5% over the past year, outpacing the S&P 500's 13%, and is up 6.4% year-to-date in 2026 while the S&P 500 is down 7%. Key tradeoffs include limited upside versus direct AI plays, interest rate sensitivity, and heavy sector concentration, but strong data center buildout tailwinds support the investment case.