Nuclear-related stocks are attracting attention as we move toward 2025. On Friday, Constellation Energy stock rose 3% and Vistra stock rose 7%. Analysts are bullish on nuclear stocks as tech companies look to power power-hungry data centers.
Nuclear stocks have soared in early 2025 on new trading activity and are expected to grow further, analysts said.
Constellation Energy stock rose 4% on Friday, extending Thursday’s 8% rise.
The increase comes after the company announced this week a $1 billion contract to supply nuclear power to more than a dozen U.S. government agencies over the next 10 years, the largest in U.S. General Services Administration history. This will be an energy purchase.
The company’s rival Vistra Inc. also jumped 8.5%, adding to its 8% rise in Thursday trading.
Analysts said that while the size of the Constellation Energy deal was relatively modest, it could be a sign of more deal activity in the industry in 2025.
“Pricing is very attractive and could provide positive consideration for future transactions,” Morgan Stanley’s David Arcaro said in a Thursday note on the Constellation Energy deal. There is,” he said.
Arcaro said the contract includes a premium that is surprisingly attractive to federal agencies, with future prospects with high-tech companies likely to pay even more for energy to power their data centers. It added that there are positive signs for the nuclear power agreement.
“We believe that tech companies are generally willing to pay higher prices, given their sustainability goals and less budget pressure, and we believe that these contracts are more affordable than we expected. There may be a wide range of customers,” Arcaro wrote.
Other analysts are similarly bullish on the stock heading into 2025, on the back of a surge in electricity demand related to the artificial intelligence boom.
“Independent utilities will continue to benefit from strong demand and energy and capacity prices in 2025,” UBS analyst William Appicelli said in a note Friday.
Mr. Apicelli reiterated his buy rating on Constellation Energy, Vistra and Talen Energy, predicting average stock price appreciation of 29% in 2025.
Such a rally would represent a slight slowdown from strong growth in 2024, with Vistra surging more than 300% and even outpacing Nvidia’s massive rally. Meanwhile, Talen Energy and Constellation Energy rose more than 200% and 100%, respectively, on the back of a boom in AI-related power demand.
AI data centers require large amounts of electricity to operate, and power demand is already expected to outstrip supply in the coming years. To meet demand, the U.S. will need to more than double the capacity of its power grid by 2030, Apollo’s Torsten Slok said in a memo last month.
