Riding the Tailwind of AI, US Clean Energy Stocks "Revive from the Brink of Death"!

Amid the AI boom, every kilowatt-hour of electricity required by US data centers now seems exceptionally precious. Against this backdrop, renewable energy stocks are experiencing noticeable capital回流, with their prices achieving the strongest quarterly gains since the clean energy frenzy early this decade in the just-ended third quarter.

Looking back over the past two years, pervasive bearish sentiment and relentless redemptions had turned this sector into a favored "prey" for short-sellers. However, a fundamental shift in US electricity demand prospects and increased policy certainty are now attracting a large number of investors back to the market.

Although President Trump's "Big and Beautiful Act" and subsequent directive to the Treasury to restrict tax credit rules earlier this year dealt a blow to the renewable energy industry, fund managers stated that the final outcome was not as severe as many had feared. Furthermore, the materialization of these headwinds provided sufficient certainty for investor participation and companies to resume projects.

"The disconnect between valuations and fundamentals was so severe that even the confirmation of negative news turned into a positive catalyst," said Alastair Bishop, Portfolio Manager at BlackRock. "This has led investors to start focusing on fundamentals."

Similarly, Lipper data shows that after 25 consecutive months of net outflows totaling approximately $24 billion, alternative energy funds recorded their first monthly net inflow in June. Although capital flowed out again in July, it turned to an inflow in August, with September inflows approaching $800 million, hitting a new high since April 2022.

Morningstar's quarterly data indicates that outflows from the clean energy/clean technology sector have decreased to their lowest level since the last recorded inflow in the second quarter of 2023.

These positive changes in capital flows echo the double-digit increases in clean energy indices and ETFs, as well as the robust rise in individual stocks across the sector, from producers to infrastructure companies.