Constellation Energy (NASDAQ: CEG) Gives Back Some Gains From Meta Deal

Constellation Energy (NASDAQ: CEG) rode a wave of investor enthusiasm in the pre-market, fueled by a landmark agreement with Meta Platforms (NASDAQ: META) and a broader strategy focused on powering the burgeoning artificial intelligence (AI) sector with clean energy. The stock was up more than 13% in the session, yet has given much back since the open, currently trading 3.4% up on the day.

The catalyst for this latest rally is Meta's announcement of a 20-year power purchase agreement with Constellation to procure electricity from the Clinton Clean Energy Center, a nuclear power plant in Illinois. This deal represents Meta's first foray into nuclear energy procurement and is designed to support the plant's continued operation, aligning with the tech giant's commitment to sustainable energy for its data centers.

The Clinton facility, boasting a capacity of 1,121 megawatts, can power approximately 800,000 U.S. homes. The agreement also includes a 30-megawatt expansion of the plant, signaling a long-term commitment to nuclear power.

This agreement with Meta is not an isolated event but rather a key element of Constellation's broader strategy. The company has been proactively forging partnerships with major technology companies to address the increasing energy needs of AI infrastructure. In September 2024, a 20-year power purchase agreement was secured with Microsoft to supply 835 megawatts of capacity to a Microsoft data center. This collaboration involved restarting a reactor adjacent to the Three Mile Island site, demonstrating Constellation's commitment to providing reliable, low-carbon energy solutions to support the tech industry's expansion.

Further solidifying its position as a leader in clean energy, Constellation Energy agreed to acquire Calpine Corporation, a leading natural gas and geothermal energy producer, for $26.6 billion in January 2025. This acquisition is projected to position Constellation as the largest clean energy company in the United States. The deal is expected to be 20% accretive to Constellation's adjusted earnings per share in 2026, with projections of at least an additional $2 per share in subsequent years.

However, investors should be aware of potential risks. The company operates in approximately 48 states, Canada, and the United Kingdom, providing geographical diversification to its revenue streams, but also exposing it to varying regulatory environments and market conditions. The success of the Calpine acquisition also hinges on successful integration and realization of projected synergies.

Despite these potential headwinds, Constellation Energy appears well-positioned to capitalize on the growing demand for clean energy solutions in the tech sector. Its strategic partnerships with tech giants, its acquisition of Calpine, and its focus on nuclear energy are all contributing to its strong financial performance and market position.