CEG's Nuclear PPA Surge: A Compounder in the Making?

Constellation Energy (CEG) reported its second-quarter earnings, revealing a significant milestone: the signing of 920 megawatts (MW) of long-term power purchase agreements (PPAs) during the quarter. Among these is a notable deal with Walmart (WMT) for 176 MW of nuclear power, spread over two 15-year terms starting in 2029 and 2030. This underscores the growing demand for stable, clean energy beyond just tech giants.

The company also highlighted progress on its Microsoft (MSFT) contract, as regulatory approvals for the Crane Clean Energy Center (formerly Three Mile Island Unit 1) moved forward. The Nuclear Regulatory Commission approved the fuel license amendment, and a key FERC waiver was granted, clearing the path to restart the plant to supply power to Microsoft under a 20-year PPA.

Financially, Constellation delivered strong results, with adjusted earnings of $2.55 per share, up from $1.91 in the year-ago quarter. The company also provided an optimistic long-term outlook, projecting 20% annualized earnings growth through 2029, based on its 2026 guidance of $11.50–$12.50 per share. Importantly, this forecast excludes any additional contracts, meaning future PPAs could provide even more upside.

These developments highlight Constellation's strategic position as the largest clean energy producer in the U.S., with a diverse portfolio including the nation's largest nuclear fleet. The company's ability to secure long-term, high-value contracts with major corporations like Walmart and Microsoft demonstrates its competitive advantage in the rapidly growing market for reliable, carbon-free power.

Overall, the earnings report and PPA announcements signal robust demand for Constellation's offerings, driven by the AI data center boom and electrification trends. The company is capitalizing on this demand, positioning itself for sustained growth in the coming years.

Constellation's latest achievements are more than just corporate wins; they reflect a broader shift in the energy landscape. The rush for 24/7 clean power is no longer limited to hyperscale data centers; it now includes retail giants like Walmart, which need reliable energy to power their operations and meet sustainability goals. This diversification of customers reduces risk and opens new revenue streams for Constellation.

For investors, the 920 MW of new PPAs with an average duration of 18.5 years provide exceptional cash flow visibility. This long-term stability is a key differentiator for Constellation, making its earnings more predictable and less volatile compared to traditional utilities. The company's ability to lock in these contracts also demonstrates its strong relationships with major corporations and its reputation as a reliable partner.

The 20% earnings growth forecast through 2029 is a standout metric. If achieved, it would place Constellation among the fastest-growing companies in the utility sector. Moreover, the fact that this projection excludes future contracts suggests that the company has multiple levers for growth, including potential new PPAs, expansion of its nuclear fleet, and continued operational efficiency.

However, it's important to consider the risks. Nuclear energy, while clean and reliable, comes with high upfront costs and regulatory hurdles. Constellation's success depends on its ability to navigate these challenges and execute on its projects, such as the Crane restart. Additionally, the company's growth is tied to the sustained demand for clean energy, which could be affected by economic downturns or shifts in policy.

Overall, Constellation's recent moves position it as a leader in the nuclear renaissance, with a strong pipeline of contracts and a clear growth trajectory. For investors, this represents a compelling opportunity to gain exposure to the clean energy transition through a company with tangible, long-term commitments.