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Further Reading from MarketBeat.com
AI Runs on Power—And Constellation Energy Controls the Switch
Reported by Jeffrey Neal Johnson. Posted: 12/16/2025.

Summary
- Federal tax credits provide a stable revenue floor for the company’s nuclear fleet, ensuring predictable cash flow for investors and supporting future growth.
- The company’s industry-leading nuclear operations are uniquely positioned to deliver the continuous, carbon-free power required to support the explosive growth of AI data centers.
- The strategic acquisition of flexible gas-generation assets complements the nuclear fleet, creating an unmatched energy platform to ensure total grid reliability.
A strategic shift is quietly reshaping how Wall Street invests in the energy sector. In a recent note, Bank of America advised clients to buy weakness in select power producers, highlighting Constellation Energy (NASDAQ: CEG) as a prime example. That call underscores a broader pivot away from the boom-and-bust cycles of traditional oil and gas toward companies that supply the modern economy’s most essential commodity: reliable electricity.
The investment case for Constellation is no longer rooted in the slow, predictable returns of a traditional utility. The most valuable energy asset is shifting from a barrel of oil to a guaranteed megawatt of clean, 24/7 power. That evolution positions Constellation less as a simple utility and more as a core infrastructure provider for the digital age—backed by federal policy and directly tied to the explosive growth of artificial intelligence (AI).
A Federally-Backed Revenue Floor
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For investors used to the volatility of energy markets, Constellation offers a distinctive element of stability. Unlike commodity producers whose profits swing with global supply shocks and price moves, a meaningful portion of Constellation’s revenue is protected by federal policy.
The key is the Nuclear Production Tax Credit (PTC). That program effectively creates a price floor for the company’s nuclear fleet—the largest in the nation. If wholesale electricity prices fall, the PTC provides a federal tax credit that preserves revenue. For 2025, that threshold is set near $44.75 per megawatt-hour. This mechanism delivers substantial downside protection and predictable cash flow—an uncommon feature in the energy sector. Investor confidence in this support was reinforced in July 2025 with the passage of the One Big Beautiful Bill Act (OBBBA), which made these tax credits a permanent part of the policy landscape.
This long-term visibility into a core revenue stream gives Constellation’s earnings a bond-like foundation. For investors, the regulatory backstop supports a strong and growing dividend while lowering the risk profile usually associated with high-growth names—creating an attractive hybrid investment.
Kilowatts for Kilobytes
Beyond federal stability, Constellation’s primary growth driver is its role in the AI revolution. The proliferation of data centers has created relentless demand for constant, carbon-free power—demand that intermittent renewables cannot meet alone. Constellation’s nuclear fleet, operating with an industry-leading 96.8% capacity factor, is uniquely suited to meet that 24/7 requirement.
The restart of the Crane Clean Energy Center (formerly Three Mile Island) is a clear case study. The project is backed by a 20-year power purchase agreement with Microsoft and a finalized $1 billion loan guarantee from the Department of Energy. Demonstrating strong execution, Constellation has accelerated the plant’s restart timeline to 2027.
Importantly, Constellation pursued a front-of-the-meter strategy—feeding power into the broader grid rather than attempting a private, direct line to a single data center. That approach helped it avoid regulatory bottlenecks that slowed several competitors in late 2024. And the Crane project is only the beginning: Constellation has identified roughly 900 megawatts of potential uprates across existing nuclear sites, a pipeline of low-cost, high-impact growth. Long-term contracts with hyperscalers are re-rating the stock, shifting its valuation from a traditional utility toward essential tech infrastructure.
Pairing Nuclear Baseload with Gas Flexibility
Constellation is also building a balanced energy platform at scale. Its acquisition of Calpine Corporation, expected to close in the fourth quarter of 2025, adds about 27 gigawatts of flexible natural gas generation. That fleet complements the nuclear base: if nuclear is the steady marathon runner, Calpine’s assets are the sprinters—able to ramp quickly to meet peak demand and stabilize the grid.
Even after this expansion, Constellation projects robust financial health. Post-acquisition, the company is expected to hold roughly $14 billion in total liquidity while maintaining an investment-grade credit rating. That balance demonstrates disciplined financial management and leaves room for further growth.
The mix of strategic growth and shareholder returns helps justify the stock’s premium valuation. While a price-to-earnings ratio (P/E) near 41x is high for a utility, it corresponds with a projected forward earnings growth rate north of 14%. That outlook is supported by a clear capital-return policy, including targeted 10% annual dividend growth and an active buyback program with about $600 million of remaining authority.
The New Face of Energy Leadership
Institutional bullishness on Constellation reflects a new market reality: the AI revolution runs on electricity, and Constellation is the leading U.S. producer of the clean, reliable power that revolution needs. The company has combined the stability of a de‑risked utility with the secular growth profile of tech infrastructure. For investors seeking a durable, direct way to participate in the AI boom without the extreme valuations of software and chipmakers, Constellation Energy represents the physical backbone of the digital future.
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