Constellation Energy (NASDAQ: CEG) is an independent power producer. That said, it is also one of the largest nuclear power providers in the United States. When nuclear power was all the rage among investors, the stock’s price rallied, and its price-to-earnings ratio skyrocketed to nearly 50x. That wasn’t a realistic valuation for the business, but the subsequent stock decline has changed the math. Here’s what you need to know.
Constellation Energy gets better and cheaper
The big story with Constellation Energy is that it sells power outside of the regulated framework. That means it can ink deals directly with customers at market rates. Notably, it recently agreed to sell nuclear power to Meta (NASDAQ: META) under a 20-year contract, helping to support that technology giant’s AI ambitions. However, it also just penned a nuclear power deal with Walmart (NASDAQ: WMT), supporting the world’s largest retailer’s goal of increasing its use of clean energy.
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The Meta deal came during a period when anything related to nuclear power was a hot commodity on Wall Street. But that enthusiasm has waned, leading to a deep price decline. Constellation Energy’s P/E ratio is now a far more reasonable 21x. Only the Walmart deal shows that AI isn’t the only growth driver, a fact further supported by the company’s purchase of Calpine, which expanded its footprint in the natural gas power space.
At this point, Constellation Energy is helping to solve the AI power crunch and doing a whole lot more, as well. What’s important to recall is that AI’s power demand is part of what is driving overall electricity demand. Notably, electricity demand increased by 10% between 2005 and 2025 and is expected to increase by 60% between 2025 and 2045. This isn’t an industry-specific event, and Constellation Energy has created a business that can benefit from the big picture changes taking shape, not just artificial intelligence.
Not cheap, but still attractive
To be fair, with a 21x P/E ratio, it would be hard to call Constellation Energy cheap. That said, the average utility stock has a P/E ratio of about 20x, so Constellation isn’t exactly expensive, either. And its ability to sign long-term contracts at market rates, unlike regulated utilities, gives it more growth appeal. If you are looking for a way to benefit from AI’s demand crunch, now is the time to give Constellation Energy a second look.
