Is Constellation Energy Stock a Buy Now?

Key Points

• Constellation Energy has positioned itself as a major supplier of reliable, carbon-free energy.

• In the past year, it has announced major power purchase agreements from hyperscalers Microsoft and Meta.

• The company operates the largest nuclear fleet in the U.S., and its $26.6 billion acquisition of Calpine Corporation adds to its energy footprint.

• 10 stocks we like better than Constellation Energy ›

Over the last year, Constellation Energy (NASDAQ: CEG) has emerged as a key player in powering the growing demand of data-hungry hyperscalers. With landmark deals already in place with tech giants Microsoft and Meta, Constellation has staked its claim as a key supplier of reliable, carbon-free energy.

As hyperscalers accelerate their data center build-outs, access to steady, clean power becomes increasingly valuable. Constellation's vast nuclear fleet offers a combination of scale, reliability, and sustainability, making it a crucial partner for the future growth of the technology.

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For investors eager to ride the electrification wave driven by artificial intelligence (AI), Constellation Energy stands out. But before diving in, let's take a closer look at the company and the opportunity that lies ahead.

Constellation owns and operates a massive nuclear fleet in the U.S.

Constellation Energy owns and operates a massive nuclear fleet in the U.S., supplying clean energy to data centers, businesses, and government. With 14 nuclear generating stations and a generating capacity of around 22 gigawatts (GW), the company is well positioned as the largest operator of nuclear plants in the United States.

On top of that, Constellation operates its nuclear plants at best-in-class levels, achieving an average nuclear capacity factor of 94.6% over the past three years. This is roughly four percentage points better than the industry average since 2013. This matters because it means Constellation can earn more revenue per reactor and gain a durability edge, enabling it to continue producing power during periods of high demand.

Major deals provide visibility into future revenue

This past year has been eventful for Constellation, which locked in several long-term agreements with major technology customers in need of clean, reliable power. Last year, it secured a 20-year power purchase agreement with Microsoft. As part of this deal, it will restart Three Mile Island Unit 1, which it will rename the Crane Clean Energy Center. This plant is expected to come online in mid-2028.

It also signed a 20-year power purchase agreement with Meta from its Clinton Clean Energy Center. Additionally, it was awarded over $1 billion in combined contracts by the U.S. General Services Administration (GSA). This includes a 10-year, $840 million contract to supply the GSA with over 1 million megawatt-hours (MWhs) annually, starting in 2025. This is the largest energy procurement in GSA history.

Expanding its already massive energy portfolio

On top of major customer deals, earlier this year, Constellation agreed to acquire Calpine Corporation for a net price of $26.6 billion, inclusive of debt. Constellation views this transaction as transformative, as it couples its nuclear fleet with reliable, dispatchable natural gas and geothermal assets of Calpine.

Calpine's portfolio primarily consists of natural gas, geothermal, battery storage, and solar assets, adding over 27 GW of generation capacity. This significantly expands Constellation's existing diverse generation fleet, which already includes nuclear, hydro, wind, and solar energy sources.

Image source: Getty Images.

This combination provides Constellation with increased scale, market diversification, and complementary capabilities that enable it to meet growing demand with a wide array of energy products. On top of that, it enhances its footprint in high-demand markets like Pennsylvania-New Jersey-Maryland (PJM), Texas, California, and New England.

The transaction is expected to be immediately accretive to adjusted operating earnings per share by more than 20% in 2026 and at least $2.00 per share through 2029. It is also projected to add more than $2 billion in free cash flow annually.

Is Constellation Energy a buy?

Constellation Energy's valuation is on the higher end at over 33.6 times earnings, which is a premium to similarly sized peers. This higher valuation is based on assumptions about long-term electricity pricing and AI-driven demand, which could make it vulnerable to volatility.

That said, Constellation has a wide array of renewable energy assets that have already made it a go-to partner for hyperscalers looking to power their energy-hungry data centers. On top of that, its expanded portfolio, combined with existing clean energy and uprate opportunities, positions Constellation to meet the increasing energy demand, making it an appealing stock to own for the long run.

Should you invest $1,000 in Constellation Energy right now?

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Courtney Carlsen has positions in Microsoft. The Motley Fool has positions in and recommends Constellation Energy, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.