Leading S&P 500 nuclear play Constellation Energy reported better-than-expected fourth-quarter profit and reaffirmed 2025 earnings guidance early Tuesday even as China's private DeepSeek AI startup threw a potential wrinkle into the market's artificial intelligence data center narrative in late January.
Constellation Energy saw Q4 EPS grow 40% to $2.44 while sales declined 7% to $5.38 billion. Prior to Tuesday's release, analysts expected quarterly earnings of $2.16 per share and revenue totaling $6.56 billion, according to FactSet. However, other consensus estimates pegged CEG sales coming in at $4.75 billion for the quarter.
The Baltimore-based company also stuck to its initial 2025 guidance from Jan. 10 of adjusted earnings between $8.90-$9.60 per share, keeping its expectations steady since announcing the acquisition of Calpine, a privately owned natural gas and geothermal power generator, for $26.6 billion. Analysts expect 2025 earnings of $9.20 per share with revenue coming in at $25.05 billion.
Chief Financial Officer Dan Eggers said in the earnings release that the 2025 guidance is based on Constellation Energy's "strong balance sheet."
Price Hikes
Wells Fargo analyst Neil Kalton raised the price target on Constellation Energy to 385 up from 325.60, maintaining a buy rating on the shares.
Meanwhile, Citi early Wednesday hiked its CEG price target to 334 from 284, keeping a neutral rating on the stock. The firm wrote Wednesday that Constellation's Q4 print beat expectations, but that the analysts are more focused on the upcoming Federal Energy Regulatory Commission meeting on Thursday.
The analysts wrote they do not expect any major changes in policy from the meeting but that any movement to support datacenter co-location at nuclear power plants or constructive comments from the FERC chair would be viewed positive for CEG.
In late 2024, utilities American Electric Power and Exelon lodged protests against a $650 million deal from last March between Amazon.com and Talen Energy. Talen was to furnish Amazon with a nuclear-powered AWS data center campus for which Talen's existing Susquehanna plant in Pennsylvania would provide dedicated power.
AEP and Exelon contended that the co-location arrangement bypassed federal charges incurred by grid operators. The Federal Energy Regulatory Commission agreed, rejecting the deal on Nov. 1.
While efficient, the scheme had "huge ramifications for both grid reliability and consumer costs," FERC Commissioner Mark Christie said in a statement.
Electric utilities, especially those with nuclear power plants, have seen demand and prices soar amid the rapid buildout of energy-intensive AI data centers. The FERC order suggests that regulators, worried about the impact of that buildout, may block or restrict at least some similar co-location deals.
Amazon and Talen are "exploring the whole suite of commercial and legal solutions" to move the project forward despite the FERC ruling, Talen Chief Executive Mac McFarland told analysts in mid-November.
S&P 500: Constellation, Nuclear Stocks
Constellation Energy fell 1.2% to 321.70 at during Wednesday's stock market. The S&P 500 component advanced 2.6% to 325.60 on Tuesday.
On Friday, CEG advanced 1.9% to 317.30. Going into Wednesday's stock market open, CEG is up 8.6% in February and is fourth on the S&P 500 index, galloping more than 40% in 2025.
Constellation Energy soared to an all-time high of 352 on Jan. 23 but has come down around 7.5% since then.
Fellow S&P 500 nuclear stock Vistra reports fourth-quarter earnings on Feb. 27 with analysts expecting a big profit swing from a year-earlier loss. Vistra stock also hit a record high on Jan. 23 of 199.84. However, VST has dropped about 15% since that date and is trading tightly at its 50-day moving average.
Constellation Energy and Vistra both initially plummeted when DeepSeek released a powerful artificial intelligence program in late January that it claimed cost just $5.6 million to build, marking a possible paradigm shift from the massive levels of investment by technology industry giants in energy and AI infrastructure.
The move marked a reverse of fortunes after the nuclear sector broadly gained ground when President Donald Trump announced that Sam Altman's OpenAI, SoftBank and Oracle are planning a joint venture called Stargate, to build data centers and other AI infrastructure in the U.S., with investments of up to $500 billion.
Meanwhile, Talen Energy also reports Q4 earnings on Feb. 27. Analysts predict quarterly profit sinking 95% with sales declining 16%.
S&P 500 component Constellation Energy has a 95 Composite Rating out of a best-possible 99. CEG also has a 96 Relative Strength Rating and a 73 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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