Constellation Energy and Vistra are two of the market’s best-performing stocks this year, with room for further gains as nuclear power assets see increased demand from developers building data centers to support artificial intelligence, according to analysts. Constellation has soared 62% year to date, making it the sixth-best performing stock in the S&P 500 index. Meanwhile, Vistra has more than doubled, making it the second-best performing stock, just behind AI chipmaker Nvidia. Barclays has initiated coverage on Constellation and has a price target of $211, suggesting an upside of about 11% from Friday’s closing price of $189.87. Constellation owns the largest number of nuclear power plants in the United States, operating 21 of the country’s 93 reactors. “We believe CEG is fundamentally well-positioned to meet growing electrification needs with its nuclear fleet providing carbon-free baseload generation in a supply-tight market,” Nicholas Campanella, lead power and utilities analyst at Barclays, said in an Aug. 8 client note. Campanella sees a recent 12% drop in Constellation shares over the past month as an attractive buying opportunity. CEG’s year-to-date mountain, Constellation Energy Vistra, operates six nuclear reactors and has a conservative financial outlook with room for upside in its plans, BMO Capital Markets analyst James Salacker said in an Aug. 8 client note. BMO raised its price target to $120, indicating a 52% upside from Friday’s closing price of $78.64. Analysts say there are big catalysts coming up for Constellation and Vistra that are not factored into their guidance, as technology companies look to nuclear reactors to power their energy-hungry data centers. Constellation and Vistra CEOs Joe Dominguez and Jim Burke said on the companies’ second-quarter earnings calls that they are in discussions with customers interested in connecting their data centers directly to nuclear plants. Constellation is also exploring the possibility of restarting Reactor 1 at Three Mile Island in Pennsylvania, which it shut down in 2019, as demand for nuclear energy rises. VST YTD MOUNTAIN VISTRA SHARE YTD “While a final decision on restarting the unit has yet to be communicated, the sharp shift in demand for carbon-free energy generation is driving the need for additional nuclear power that could be provided by a restart,” Campanella said.
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