Nuclear energy is emerging as a pillar of the global energy transformation, offering reliable, eco-friendly power. The growing demands of advanced data centers, driven by artificial intelligence and cloud computing, are pressuring traditional power systems to evolve. Nuclear power provides carbon-zero, dependable electricity as people look to it to meet digital-era energy needs.
Constellation Energy (CEG) is leading the nuclear renaissance with strategic initiatives to expand its clean energy footprint. Recently, the company announced its intention to acquire Calpine Corporation for $27 billion. Through the acquisition, CEG intends to develop its portfolio by adding geothermal and natural gas assets to create a complete energy solution. The purchase demonstrates CEG’s commitment to increasing its energy network and highlights the trend of combining multiple clean power sources for future needs.
For investors, Constellation Energy’s focus on nuclear power and clean energy innovation presents an attractive long-term opportunity, particularly as the industry moves towards sustainable and dependable energy solutions.
About CEG Stock
Valued at a market capitalization of approximately $101 billion, Constellation Energy (CEG) is the largest producer of carbon-free energy in the United States, thanks to its extensive portfolio of nuclear energy plants that form the backbone of its energy generation capacity. The U.S.-based energy company specializes in electricity generation and marketing, operating across five regions. It offers natural gas (NGH25), renewable energy, and sustainable solutions with a capacity of 33,094 megawatts, encompassing nuclear, wind, solar, and hydroelectric power.
CEG shares have been on a strong bull run, reaching an all-time high of $336 on Jan. 22. This impressive performance has been fueled by several major announcements, including plans to reopen the Three Mile Island nuclear facility, supply nuclear power to Microsoft’s (MSFT) server farms, and acquire Calpine. These developments have propelled the stock 50% higher in 2025 alone. Overall, CEG has delivered an exceptional 185% gain over the past 52 weeks, far outperforming the S&P 500 Utilities Sector SPDR (XLU), which rose 31% during the same period.
Additionally, CEG offers a modest annual dividend of $1.41 per share, yielding 0.44%. While this yield may not be particularly compelling within the energy sector, it remains worth considering for investors prioritizing sustainability.
Constellation Energy Buys Out Calpine
On Jan. 10, Constellation Energy showed its commitment to California’s clean energy future by buying Calpine for $16.4 billion in stock, or a net purchase price of $27 billion. Adding Calpine’s geothermal resources, especially the Geysers geothermal field, makes Constellation one of the biggest renewable energy suppliers, with 2.5 million customers in the United States. The purchase adds new energy sources to Constellation’s offerings and improves its standing in California, a crucial area for clean energy development. After acquiring Calpine, Constellation’s customer base in California jumped significantly, providing 10% of the state’s clean electricity.
However, the acquisition isn’t without challenges. The $12.7 billion debt of Calpine adds to Constellation’s financial burden, and keeping the Geysers running efficiently depends on finding innovative ways to utilize the field. While reinjection techniques help prolong the field’s viability, concerns about earthquakes persist. Constellation can capitalize on California’s stringent climate change targets, and its expertise places it in a strong position.
CEG Delivered Beat-and-Raise Quarterly Results
On the earnings front, CEG delivered exceptional performance in its latest quarterly results. The energy company reported quarterly revenue of $6.55 billion, significantly surpassing the $2.66 billion estimate, driven by strong nuclear operations and favorable market conditions. Its nuclear fleet generated 45,510 GWh in Q3 2024, compared to 44,125 GWh in Q3 2023, reflecting improved operational efficiency.
EPS came in at $2.74 per share, beating analysts’ estimates of $2.72 and marking a 50% year-over-year increase. Net profit rose from $731 million to $1.2 billion, boosted by favorable nuclear production tax credit (PTC) portfolio results and strong market conditions, though partially offset by higher labor and material costs as well as nuclear outages. The company’s free cash flow remains in negative territory due to elevated capital expenditures, rising costs, and nuclear outages.
The company is also expanding its clean energy footprint, highlighted by a 20-year power purchase agreement with Microsoft for the Crane Clean Energy Center, formerly known as Three Mile Island Unit 1.
For the full year 2024, the energy firm raised its earnings guidance to a range of $8.00 to $8.40 per share, signaling confidence in its growth prospects. Analysts expect the company’s strong growth trajectory to continue, with revenue and EPS projected to rise in the coming quarters.
Analysts’ Projections and Final Words
Among 17 analysts covering Constellation Energy, the consensus rating is a “Moderate Buy,” with 11 assigning a “Strong Buy” and six recommending a “Hold.” While the stock has already exceeded its mean price target, its highest target of $378 suggests potential 17% upside
Following its strong price rally, CEG is trading at a premium valuation of 41 times earnings, significantly above the industry median of 18.8x. These elevated multiples suggest that the stock may be overvalued in the short term. While the Calpine acquisition strategically positions CEG for long-term growth in the clean energy and nuclear sectors, the stock could face near-term corrections due to overbought signals and concerns over its substantial debt load.
