Constellation Energy Locks in Nuclear Revenue Amid AI Power Surge

Constellation Energy has secured long-term contracts for the majority of its nuclear power generation output through 2050 and beyond, a strategic move designed to provide revenue visibility amid surging electricity demand driven by artificial intelligence. In the second quarter of fiscal 2026, the company signed 920 megawatts of new long-term agreements, including a 176-megawatt deal with Walmart. These contracts, which run for 15 to 20 years with delivery scheduled between 2029 and 2032, build upon existing 20-year agreements with Microsoft and Meta.

The Walmart agreement is split across two 15-year contracts and will help fund an expansion at the Dresden plant in Illinois. These deals sit alongside earlier commitments with technology giants Microsoft and Meta, tying some of the world’s largest firms to Constellation’s output well into the 2040s. This approach contrasts sharply with the sector’s typical reliance on volatile wholesale prices, offering a level of financial predictability that is rare in the power industry.

Concurrently, Constellation Energy finalised the reshaping of its fleet by completing the sale of the Brazos Valley Energy Center in Texas to LS Power for $860 million. This transaction satisfied the final regulatory requirement for the company’s $16.4 billion acquisition of Calpine. The combination of Calpine assets and the expanding stack of nuclear contracts underscores Constellation’s focus on securing large, long-term corporate customers rather than exposing revenue to short-term market fluctuations.

Financially, the company reported second-quarter fiscal 2026 revenue of $7.5 billion, which fell below the $7.94 billion analyst estimate. However, adjusted operating earnings per share came in at $2.55, beating the consensus of $2.41. Constellation also raised its full-year adjusted operating earnings guidance to a range of $11.50 to $12.50 per share, with a midpoint of $12, representing an increase of $0.50 from the previous forecast. Management attributed the stronger outlook to commercial execution and disciplined capital allocation.

Despite the positive commercial momentum, the company faces balance sheet pressures, holding $24.7 billion in debt against just $697 million in cash. This debt load has contributed to a 19 per cent decline in share price over the past year, alongside higher net interest expenses. Nevertheless, Wall Street analysts remain bullish, maintaining a consensus Strong Buy rating with a mean price target of $351.86, implying 28 per cent upside from current levels. The company has also deployed approximately $2.2 billion toward share buybacks in the four months since its March outlook, with $2.8 billion remaining under authorisation.