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Reuben Gregg Brewer, The Motley Fool
Sat, July 11, 2026 astatine 1:35 PM CDT 3 min read
Constellation Energy (NASDAQ: CEG) is an autarkic powerfulness producer. That said, it is besides 1 of the largest atomic powerfulness providers successful the United States. When atomic powerfulness was each the rage among investors, the stock's terms rallied, and its price-to-earnings ratio skyrocketed to astir 50x. That wasn't a realistic valuation for the business, but the consequent banal diminution has changed the math. Here's what you request to know.
Constellation Energy gets amended and cheaper
The large communicative with Constellation Energy is that it sells powerfulness extracurricular of the regulated framework. That means it tin ink deals straight with customers astatine marketplace rates. Notably, it precocious agreed to merchantability atomic powerfulness to Meta (NASDAQ: META) nether a 20-year contract, helping to enactment that exertion giant's AI ambitions. However, it besides conscionable penned a atomic powerfulness woody with Walmart (NASDAQ: WMT), supporting the world's largest retailer's extremity of expanding its usage of cleanable energy.
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The Meta woody came during a play erstwhile thing related to atomic powerfulness was a blistery commodity connected Wall Street. But that enthusiasm has waned, starring to a heavy terms decline. Constellation Energy's P/E ratio is present a acold much tenable 21x. Only the Walmart woody shows that AI isn't the lone maturation driver, a information further supported by the company's acquisition of Calpine, which expanded its footprint successful the earthy state powerfulness space.
At this point, Constellation Energy is helping to lick the AI powerfulness crunch and doing a full batch more, arsenic well. What's important to callback is that AI's powerfulness request is portion of what is driving wide energy demand. Notably, energy request accrued by 10% betwixt 2005 and 2025 and is expected to summation by 60% betwixt 2025 and 2045. This isn't an industry-specific event, and Constellation Energy has created a concern that tin payment from the large representation changes taking shape, not conscionable artificial intelligence.
Not cheap, but inactive charismatic
To beryllium fair, with a 21x P/E ratio, it would beryllium hard to telephone Constellation Energy cheap. That said, the mean inferior banal has a P/E ratio of astir 20x, truthful Constellation isn't precisely expensive, either. And its quality to motion semipermanent contracts astatine marketplace rates, dissimilar regulated utilities, gives it much maturation appeal. If you are looking for a mode to payment from AI's request crunch, present is the clip to springiness Constellation Energy a 2nd look.
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