The article discusses how the recent rally in utility stocks, driven by the potential of artificial intelligence (AI) to improve efficiency and reduce costs, has diluted the defensive nature of the sector. Traditionally, utilities have been considered a safe haven during market downturns due to their stable cash flows and dividend payments. However, the AI-powered rally has led to utilities outperforming the broader market, making them less defensive. The article highlights that while AI could benefit utilities in the long run, the sector’s recent outperformance raises concerns about its ability to provide downside protection in the event of a market sell-off. Additionally, the article cautions that the AI-driven rally may be overdone, as the technology’s impact on utilities is still uncertain and could take years to materialize. Overall, the article suggests that investors seeking defensive exposure may need to look beyond utilities, as the sector’s traditional defensive characteristics have been diluted by the AI-fueled rally.