3 Energy Stocks I'm Not Selling, No Matter What the Market Does

Data centers require enormous amounts of electricity, tying energy stocks closely to the rise in artificial intelligence. Lately, however, cracks have appeared in the narrative. The cost of insuring CoreWeave's bonds against default has climbed, potentially signaling weaker investor appetite for AI-related debt. Meanwhile, Meta Platforms was mum on its 2027 capital expenditure plans, and investors are questioning the AI trade.

These concerns have weighed on AI-linked energy stocks, including Constellation Energy (NASDAQ: CEG), Vistra (NYSE: VST), and Bloom Energy (NYSE: BE). But short-term uncertainty has not changed my long-term investment thesis, and I'll continue to hold all three. Here's why.

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These energy stocks are up even after recent sell-offs

Over the past three years, Constellation Energy, Vistra, and Bloom Energy have delivered eye-opening annualized returns of 32%, 65%, and 156%, respectively. These companies have benefited from the data center build-out and the massive electricity demand these next-generation campuses create.

Data center energy demand has transformed the energy sector from a boring, stable industry, traditionally known for income stocks and renewables, into a key cog in AI's future. But as the data center build-out accelerates, investors are growing concerned about the sustainability of hyperscaler spending.

Technology companies have posted mixed returns this year, and neocloud providers and other AI-adjacent names have fallen sharply. Over the past year or so, Constellation, Vistra, and Bloom Energy have all fallen 36% to 38% from their all-time highs, creating an interesting opportunity for investors to buy shares at a discount to earlier in the year.

Constellation and Vistra have stabilized their businesses thanks to long-term PPAs

The sell-off in energy names comes as investor enthusiasm around hyperscaler spending and the AI build-out wanes. But even with projects in the pipeline, energy companies should continue to benefit from the growing use of AI for inference, training, and agentic workflows. Modern AI data centers require significant power; as the technology is more widely adopted, power needs will grow.

Constellation Energy and Vistra are appealing because they are independent power producers, meaning they operate separately from regulated utilities, in which lawmakers set rates. Constellation owns the largest nuclear fleet in the U.S., while Vistra's wide-ranging 44 GW footprint includes huge amounts of natural gas alongside nuclear.

Over the past few years, Constellation has signed several power purchase agreements (PPAs) with companies including Walmart, Microsoft, Amazon, and Meta Platforms. This month, Constellation also signed a 3.6 GW, 20-year PPA with Alphabet's Google, which will help bring an additional 890 MW of new nuclear capacity online as customers worry about rising utility rates.

Vistra also has massive PPAs with Amazon and Meta Platforms. The company also secured a $4.2 billion commitment from the U.S. Department of Energy to finance 433 MW in nuclear capacity uprates in Pennsylvania and Ohio.

By locking in PPAs with major technology companies that generate substantial cash flows, Constellation and Vistra secure fixed prices for large chunks of their energy capacity. This can help insulate these historically volatile businesses from spot-market price swings by locking in contracted rates with customers.

Bloom Energy is turning robust demand into cold, hard cash

The rapid build-out of data centers has put grid constraints in the spotlight. Grid interconnection queues can span years, and utilities aren't used to bringing so much capacity online so quickly. As a result, Bloom Energy has seen incredibly strong demand for its solid-oxide fuel cells, which can run on natural gas, hydrogen, or biogas.

In its most recent quarterly results, Bloom's revenue grew 138% year over year to $1.2 billion, while its gross margin grew to 34%. The company also reported operating income of $225 million and diluted earnings per share of $0.78, a sharp rebound from a $0.10-per-share loss last year. The company again raised its full-year revenue guidance to $4.5 billion at the midpoint, up from the previously guided $4.05 billion.

The recent sell-off is an opportunity to add more AI energy stocks

Constellation and Vistra traded at high valuations last year, at around 43 times and 37 times their forward earnings estimates, respectively. After the sell-off, these stocks now trade at much more modest forward earnings multiples of 21 and 16, giving investors who buy here a greater margin of safety after both stocks' nearly 40% decline.

Meanwhile, Bloom Energy continues to grow, expanding its manufacturing capacity to meet rising demand for its solid-oxide fuel cells. The stock trades at about 70 times this year's earnings, down from 100 times forward earnings, where it traded just a few weeks ago. With analysts projecting 72% and 60% EPS growth in 2027 and 2028, Bloom remains an appealing stock to capitalize on the growing energy demands driven by AI.

Courtney Carlsen has positions in Alphabet, Bloom Energy, Constellation Energy, Meta Platforms, Microsoft, and Vistra. The Motley Fool has positions in and recommends Alphabet, Amazon, Bloom Energy, Constellation Energy, Meta Platforms, Microsoft, Vistra, and Walmart. The Motley Fool has a disclosure policy.