Topline
Facebook parent Meta announced an unprecedented deal with Constellation Energy, the largest American nuclear power plant operator, cementing Meta’s turn to turn to nuclear energy to power its energy intensive, generative artificial intelligence initiatives, and sending Constellation shares surging.
AI has made nuclear energy hot again. Pictured is a Constellation nuclear plant in Pennsylvania.
Key Facts
Meta inked an agreement to buy all power produced in Constellation’s plant in Clinton, Ill., for the 20-year period beginning 2027, the companies said Tuesday.
It’s the first-ever example of a company committing to buy all energy from a single nuclear plant, according to The Wall Street Journal, though Constellation did enter a similar, but stripped down, 2024 agreement with Microsoft to reopen a Pennsylvania plant.
Financial terms of the deal were not disclosed, but Constellation CEO Joseph Dominguez told the Journal it’s “billions of dollars of capital that you’re signing up for to run a plant for 20 more years.”
Constellation stock popped more than 5% following the announcement, hitting a five-month high of $340 per share and market value of more than $100 billion.
Surprising Fact
Constellation Energy has been one of the biggest winners on Wall Street as AI reshaped corporate America. Dating back to the late 2022 release of OpenAI’s ChatGPT chatbot, Constellation has returned more than 230% to investors, far outperforming the S&P 500’s 51% return during the period. Constellation is the 16th-best performer on the S&P during the stretch, besting perhaps more obvious AI winners like Amazon, Google parent Alphabet, Microsoft, Oracle and Tesla.
Crucial Quote
“Nuclear energy, once a pariah left for dead, is enjoying a rebirth, bolstered by AI’s voracious need for energy and the growing acknowledgment that additional sources of energy will be needed to balance out the intermittency of solar and wind power,” Yardeni Research founder Ed Yardeni wrote in a recent note to clients.
Tangent
President Donald Trump signed an executive order May 23 aiming to quadruple the U.S.’ nuclear energy capacity by 2050. “It’s time for nuclear,” Trump said at a press conference on the initiative, flanked by Dominguez. Nuclear energy does not produce carbon emissions like fossil fuels, but nuclear had largely gone out of vogue prior to the AI proliferation given its high maintenance costs and concerns about safety.
Big Number
$64 billion to $72 billion. That’s the amount Meta expects to shell out on capital expenditures this year as it builds out its generative AI initiatives, the firm said in its latest earnings report.
Further Reading
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