By Avi Salzman
Constellation Energy was the first major beneficiary of the boom in AI electricity demand, but the stock has become a show-me story, dogged by doubts about its ability to continue growing in an increasingly competitive field.
It will get a chance to prove itself at a long-awaited investor presentation on Tuesday.
"This will be a seminal event for the IPP [independent power producer] industry," wrote Jefferies analyst Paul Zimbardo.
Shares of Constellation, the country's largest power producer, tripled in its first two years as a public company, between 2022 and 2024, and then nearly tripled again in the year after that. It signed deals with Meta and Microsoft to sell them power from nuclear reactors.
But in the past few months, investors have begun to doubt Constellation's growth trajectory.
The company has continued signing deals to power AI data centers, but the cadence of the deals has been too slow to generate enthusiasm. Politics is getting in the way, too. Plans by the White House and some state governors to intervene in power markets to reduce customer bills could weigh on Constellation's earnings.
The Iran war hasn't helped either, driving interest rates higher and raising fears of an economic slowdown. The stock is down 19% this year, and off 28% from its highs in October.
On Tuesday, the company will try to dispel worries at the special investor meeting. Constellation didn't hold a conference call after its fourth- quarter earnings release last month, deciding to wait until now to give guidance and explain its vision.
Zimbardo said investors are looking for Constellation to announce lucrative new agreements, preferably to sell at least 1 gigawatt of nuclear power to a tech company at "premium pricing (15+ year terms)." A gigawatt is enough power to supply nearly one million homes.
Morgan Stanley analysts recently wrote the stock could rise 30%, partly on the expectation of more data center deals.
Investors want to see how Constellation plans to profit off its recent acquisition of Calpine, another power producer that owns a large cadre of natural gas plants.
They also want the company to commit to return capital to shareholders in the form of dividends and buybacks. Constellation's 0.6% dividend yield puts it well below most traditional utilities.
As for new nuclear reactors, investors would rather Constellation tread carefully, Zimbardo notes.
"Most investors we speak with are cautious about power companies undertaking large new nuclear risk in general," he wrote.
Nuclear reactors involve very expensive upfront investments, and the financial benefits may not start for over a decade. Dan Eggers, Constellation's senior vice president for finance, told Barron's last week that any new reactor investments would have to clear a high bar.
"We have been very clear that we are not going to put meaningful investor capital at risk on any project, particularly nuclear, without a clear path, a clear offtaker and meaningful risk mitigation," he said.
Write to Avi Salzman at avi.salzman@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 30, 2026 17:41 ET (21:41 GMT)
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