3 in 3: Swinging at Utilities, Banks Dodge DC Curveballs, Scouting AI’s All-Stars

US utilities look undervalued, bank policy risks appear manageable, and companies leading AI adoption are increasingly being rewarded by the market.

• Q3 earnings season begins the following week against a backdrop of building inflationary pressures, making corporate results an important test of the investment theses.
• US utilities have lagged the S&P 500 by more than 30 percentage points since the end of March as Treasury yields rose, but regulation allows companies to shift investment toward more attractive states and recover higher borrowing costs over time.
• Voya is not calling a peak in bond yields, but considers utilities unusually defensive businesses with growing earnings that should benefit from AI-related power demand; its value strategies have been adding to the group.
• Voya’s financials team visited Washington before the midterm elections and argues that policy risk is limited because regulators are presidential appointees, Democrats have little appetite for credit-card rate caps, and bank-capital reform is becoming more predictable.
• Banks have given back about 10% to 12% of their summer gains since mid-August, but Voya attributes the pullback to factors other than Washington and sees the policy setup as supportive regardless of the November result.
• A proprietary AI-adoption signal that showed little differentiation in May has aligned with individual-stock performance over the past four to five months, with AI leaders generally outperforming peers since about May.

Takeaway: Investors should look beyond broad sector moves toward utilities with attractive regulatory economics, banks with improving policy visibility, and companies demonstrating measurable AI adoption, while using the coming earnings season to test these signals.