Constellation Energy operates the largest nuclear power fleet in the United States
The company is not regulated, but may face price restrictions in a key market.
Investors looking for AI energy plays may like Constellation for its upside potential and ability to generate energy today.
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Nuclear power is back.
After years of stagnation — years, however, of quiet innovation — nuclear companies have come alive again. The reason is not hard to see. Nuclear offers carbon-free electricity that can run continuously, something solar and wind can’t promise on their own. And in a world facing increasing electricity demands, especially from artificial intelligence (AI) data centers, nuclear reliability is suddenly important.
A number of nuclear start-ups have attracted the attention of investors with ambitious and innovative ideas. Think, for example, of the small reactor designs of NuScale Power(NYSE: SMR) and ok hey(Nyse: Oklo) or the portable reactors of Nano Nuclear Energy(NASDAQ: NNE).
These companies are working on some exciting technology, but none match the scale and earning power of the clean energy giant Constellation Energy (NASDAQ: CEG). Indeed, if you only had one nuclear power storage, the Constellation is a compelling first choice. Here’s why.
The aforementioned nuclear start-ups — Oklo, NuScale, Nano — are early-stage growth stocks. Neither is generating significant revenue. Only one — NuScale — has received approval from the Nuclear Regulatory Commission (NRC) for its reactor design, while Oklo and Nano are still in the thick of the licensing process.
Constellation, by contrast, already operates a large fleet of nuclear plants. In fact, it operates the greater fleet of nuclear facilities in the United States
Image source: Constellation Energy.
The company has secured major deals with tech giants, including a 20-year contract from Meta Platforms for the full production of the Clinton nuclear plant and involvement from Microsoft in restoring the old Three Mile Island reactor to full functionality.
The constellation is profitable, with strong recent earnings growth. Its trailing 12-month revenue reflects a company that has clearly benefited from rising energy demands, with 12-month future estimates still dwarfing revenue expectations for Oklo, Nano and NuScale.
CEG Income Data (TTM) from YCharts
Part of Constellation’s strength lies in its business model. Unlike most utilities, which operate as regulated regional monopolies, Constellation functions primarily as an unregulated energy supplier. This means that it can sell electricity at market rates rather than respecting the prices set by the government.
In practice, this structure can allow more opportunity for profit when prices are strong, although, at the same time, it also introduces risk. While current trends in electricity are favorable, the energy market can be volatile, and lower energy prices in key regions can strain margins and lead to uneven quarterly results.
Constellation may also be facing potential political risk in its mid-Atlantic market. President Donald Trump, along with local governors in that region, seem aligned on a plan to limit prices on existing energy sources. While the details are still uncertain, a move in that direction could limit Constellation’s head in that region.
Constellation stock trades at about 35 times trailing earnings and more than 7.5 times book value. Both of these point to a highly valued energy company with a lot of expectations already baked into the price.
There is still opportunity for growth, especially if electricity demands from AI accelerate over the next five years as many forecasts suggest. The stock is not without risks, but it carries less execution risk than many nuclear start-ups, such as Oklo. That said, investors who want nuclear exposure without the volatility of a single stock may be more interested in a nuclear energy exchange-traded fund (ETF) instead.
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Steven Porrello holds positions at Microsoft and Oklo. The Motley Fool has positions in and recommends Constellation Energy, Meta Platforms, and Microsoft. The Motley Fool recommends NuScale Power and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
1 No-Brainer Nuclear Power Stocks to Buy Now and Never was originally published by The Motley Fool
