Big Tech Keeps Signing Nuclear Deals With the Same Company. Here's Who It Is and Why That Matters More Than Any Single Deal.

Shares of Constellation Energy (NASDAQ: CEG) rallied on news that it had agreed to a deal that will bring 890 megawatts of new nuclear power to the PJM grid. But the stock still remains 25% below its late 2025 high, as of this writing. The latest deal, with Alphabet's (NASDAQ: GOOG) Google, is just one of many the company has inked with high-tech companies. And it highlights the strength of Constellation Energy's business right now. Here's why it's so important.

Artificial intelligence is disrupting the grid

U.S. electricity demand increased by 10% between 2005 and 2025. It is projected to increase by 60% between 2025 and 2045. That's a step change in demand, and it is already straining the grid, with new technology playing a material part in the change. The big story right now is artificial intelligence, which requires high-power computers that consume massive amounts of electricity.

Image source: Getty Images.

It is not a coincidence that Constellation Energy has inked supply deals with Google, Microsoft (NASDAQ: MSFT), Meta (NASDAQ: META), and Amazon (NASDAQ: AMZN). All are aggressively building out their AI capacity. And, just as important, as an independent power producer, Constellation Energy operates outside of the regulatory framework.

Essentially, it sells power directly to companies, so the technology giants it is working with don't have to go to the local regulated utility for power. Rising demand from AI data centers has been blamed for higher consumer electricity costs, but working with Constellation means companies are bringing in their own power. That's an important phrase, because AI companies are increasingly being pushed to do just that. The agreement with Google "offers a direct response to PJM's 'Bring Your Own Power' proposal," according to the two companies.

Constellation Energy has the scale and reach tech giants need

Working outside of the regulated utility framework is an important reason why Constellation Energy is being tapped by so many tech companies. However, there's still more to the story.

Notably, Constellation Energy is the largest owner and operator of nuclear power plants in the United States. It has the scale and expertise to take on large power supply deals. Geographic reach is part of the equation, since the company has generating assets spread across the continental United States.

That said, there's another important detail here. While nuclear is at the heart of many of the company's big AI power supply agreements, that's not all that Constellation Energy does. It also operates a large fleet of natural gas generating plants. And it has wind, solar, and hydroelectric power facilities, as well. So it can provide a suite of solutions for its tech customers, allowing them to work with a single provider rather than creating a patchwork of relationships.

Constellation wins with long-term contracts

There is a host of reasons why technology companies are choosing Constellation Energy, and they all amount to a big win for this independent energy provider. Each agreement typically creates a long-term income stream for the company, often lasting up to 20 years. That supports a solid growth story and creates a snowball effect, as the company's position in the industry is further solidified.

In other words, it is reasonable to expect more major power deals, nuclear and otherwise, for Constellation Energy in the future. It is also worth noting that companies outside of tech, including Walmart (NASDAQ: WMT), have been working with Contellation, as well. While the stock probably won't interest value or dividend investors, given its lofty 29x price-to-earnings ratio and tiny 0.5% yield, growth investors may want to take a closer look as this independent power producer continues to expand its already strong position in the industry.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Constellation Energy, Meta Platforms, Microsoft, and Walmart. The Motley Fool has a disclosure policy.