Can AI-Driven Electricity Demand Fuel CEG's Long-Term Growth?

Constellation Energy Corporation CEG benefits from the rapid growth in clean electricity demand driven by artificial intelligence, which requires large amounts of reliable, around-the-clock power. CEG's nuclear fleet delivers reliable, carbon-free power, supporting rising electricity demand. 

The company is strengthening its long-term growth by securing large clean-energy supply contracts with leading technology and commercial customers. It recently signed a 15-year power purchase agreement (PPA) with Walmart for 176 megawatts (MW) of carbon-free electricity from the Dresden Clean Energy Center and a 20-year agreement with Microsoft linked to the restart of the Crane Clean Energy Center. Constellation Energy also signed a 380 MW agreement with CyrusOne in Texas, with an option to expand by another 380 MW. These developments strengthen the company's position to benefit from AI-driven electricity demand over the coming years.

To meet rising demand, Constellation Energy has submitted nearly 5,000 MW of new generation projects, including nuclear uprates, natural gas plants and battery storage. The acquisition of Calpine also strengthens the company's ability to supply reliable electricity by adding a large fleet of flexible natural gas power plants.

CEG expects base earnings to grow by more than 20% annually through 2029. This outlook is supported by long-term customer contracts, nuclear energy production tax credits, growing free cash flow and increasing demand from hyperscale data centers.

AI Data Centers Demand Creates New Opportunity for Utilities

According to the International Energy Agency, AI-driven data centers are boosting demand for reliable electricity. This is driving investments in grids, transmission, renewables and energy storage, creating long-term growth opportunities for utilities and power producers.

Vistra VST signed 20-year PPAs with Meta for 2,600 MW of zero-carbon nuclear power, securing stable long-term revenues, supporting capacity expansion and strengthening its position to benefit from rising AI-driven data center electricity demand.

AES Corporation AES expanded its Google partnership by signing 20-year PPAs to supply co-located power for a Texas data center, strengthening long-term revenue visibility and AI-driven growth.

CEG’s Earnings Estimates

The Zacks Consensus Estimate for 2026 and 2027 EPS indicates an increase of 25.03% and 16.02%, respectively, year over year.

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CEG’s Returns on Equity (ROE)

Constellation Energy's trailing-12-month ROE is 16.81%, ahead of the industry average of 7.15%.

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CEG’s Stock Price Performance

In the past month, the company’s shares have plunged 4.6% against the industry’s 0.2% growth.

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CEG’s Zacks Rank

CEG currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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