Bank of America stated in its latest report that the recent decrease in electricity costs in the USA has given consumers some breathing room, but the significant demand for electrical utilities caused by AI may shorten this respite. According to the bank's data, the median payment decreased by 1.4% year-on-year in the three months ending in May. This is good news for consumers who have faced continuously rising electricity costs in the past two years. The average utility expense accounts for approximately 8% of income in households earning less than $4,000 per month, according to internal data from the bank. However, there are already indications that this relief will not last long. Bank of America pointed out that the price of electricity, the primary driver of utility costs, is rising. In May of this year, US electricity prices rose 5.9% year-on-year, a significant acceleration from 3.8% in January.

According to the bank's data, the median payment decreased by 1.4% year-on-year in the three months ending in May. This is good news for consumers who have faced continuously rising electricity costs in the past two years.

The analyst from Bank of America wrote that, while prices are still far above 2019 levels, the drop cannot be ignored: on average, utility expenses account for approximately 8% of income in households earning less than $4,000 per month. Please use your Futubull account to access the feature.

However, there are already indications that this relief will not last long. Bank of America pointed out that the price of electricity, the primary driver of utility costs, is rising. In May of this year, US electricity prices rose 5.9% year-on-year, a significant acceleration from 3.8% in January.

The demand for electrical utilities is skyrocketing.

Bank of America believes that the increase is due to the spike in demand for electrical utilities, driven by a variety of sources.

Firstly, to some extent, climate change has raised electricity consumption because households turn on air conditioning or use heat pumps more frequently. Second, legislation such as the Inflation Reduction Act and the Chip Act has also played a role. Bank of America states that not only has it promoted the popularity of electric vehicles, but it has also caused a significant increase in domestic manufacturing, which is extremely energy-intensive. "Considering that the construction of large-scale nuclear power plants takes a long time, there may be more (demand for electricity) in the future," the institution predicts.

However, overall, Bank of America pointed out that AI is the primary and core factor driving the upward trend in utility costs over the next few decades. Although this technology has attracted Wall Street's attention in recent years, the bank emphasized that using AI consumes a lot of electricity.

The analyst wrote: "For example, Bank of America's global research shows that although using AI to classify text requires about 2 kilowatt-hours to complete 1,000 tasks, generating images with AI to complete the same number of tasks requires nearly 3,000 kilowatt-hours. As a reference, the average monthly electricity consumption in U.S. households is about 886 kilowatt-hours."

However, overall, Bank of America pointed out that AI is the primary and core factor driving the upward trend in utility costs over the next few decades. Although this technology has attracted Wall Street's attention in recent years, the bank emphasized that using AI consumes a lot of electricity.

The analyst wrote: "For example, Bank of America's global research shows that although using AI to classify text requires about 2 kilowatt-hours to complete 1,000 tasks, generating images with AI to complete the same number of tasks requires nearly 3,000 kilowatt-hours. As a reference, the average monthly electricity consumption in U.S. households is about 886 kilowatt-hours."

Finally, Bank of America specifically pointed out that for investors, the continuously growing demand for electricity has made utility stocks attractive, and utility stocks are expected to be the real winners of the AI boom. Running AI software on semiconductor chips generates much more heat than running regular chips, so it requires a lot of electricity to cool them.

Bank of America's report stated that in the past decade, the annual growth in demand for electricity was only 0.4%. However, it is expected that the growth rate will be between 2.1% and 2.8% in the next decade. By 2026, an additional 18 to 28 gigawatts (GW) of electricity capacity will be required. "Although fluctuations in global commodity prices, particularly in fossil fuel prices, may continue to affect the prices that consumers pay for energy, the demand for additional capacity in the power generation system is likely to be a barrier to long-term decline in their electricity bills," the analyst wrote.

Bank of America's report stated that in the past decade, the annual growth in demand for electricity was only 0.4%. However, it is expected that the growth rate will be between 2.1% and 2.8% in the next decade. By 2026, an additional 18 to 28 gigawatts (GW) of electricity capacity will be required. "Although fluctuations in global commodity prices, particularly in fossil fuel prices, may continue to affect the prices that consumers pay for energy, the demand for additional capacity in the power generation system is likely to be a barrier to long-term decline in their electricity bills," the analyst wrote.

"Although fluctuations in global commodity prices, particularly in fossil fuel prices, may continue to affect the prices that consumers pay for energy, the demand for additional capacity in the power generation system is likely to be a barrier to long-term decline in their electricity bills," the analyst wrote. Finally, Bank of America specifically pointed out that for investors, the continuously growing demand for electricity has made utility stocks attractive, and utility stocks are expected to be the real winners of the AI boom.

Finally, Bank of America specifically pointed out that for investors, the continuously growing demand for electricity has made utility stocks attractive, and utility stocks are expected to be the real winners of the AI boom.

Editor / jayden