Constellation Energy (CEG, Financial) released its financial results for the third quarter, reporting a non-GAAP earnings per share of $2.74, surpassing expectations by $0.06. Revenue saw a year-over-year increase of 7.2%, reaching $6.55 billion, exceeding estimates by $1.96 billion. The company raised its guidance midpoint for non-GAAP earnings per share to a range of $8.00 to $8.40, slightly above the market expectation of $8.05.
The surge in artificial intelligence and computing demands has led to a significant rise in electricity consumption, particularly from data centers, pushing power demand to historical highs. The U.S. Energy Information Administration forecasts that electricity consumption, driven by AI usage, data center expansion, and growing consumer demand, will reach record levels in 2024 and 2025.
Constellation Energy's stock price has more than doubled since the beginning of the year, bolstered by operating 21 nuclear power plants, the largest collection of conventional nuclear reactors in the U.S. The increasing power needs prompted by AI data center expansions indicate potential support for deploying up to 12 next-generation reactors to supply low-carbon power to major tech companies like Amazon (AMZN) and Google (GOOGL).
Last month, Microsoft signed an agreement with Constellation Energy to restart the Three Mile Island nuclear station and purchase all its generated power. Additionally, Constellation Energy announced a 20-year power purchase agreement with Microsoft to support the launch of the Crane Clean Energy Center, leveraging nuclear power's carbon-free emissions to attract environmentally conscious tech giants.
On the regulatory front, the Federal Energy Regulatory Commission recently rejected a revised interconnection agreement between Amazon's data center and its competitor Talen Energy (TLN) for a new nuclear power plant in Pennsylvania. Consequently, Talen Energy's stock fell 13% during pre-market trading, impacting other nuclear power companies, with Constellation Energy's shares initially dropping 13.15% before narrowing to a 7.45% decrease.
