AI-powered data centers are a booming industry now. The energy-hungry AI space has made nuclear energy one of the hottest industries on Wall Street over the past year. At this stage, investors should focus on nuclear energy producers or equipment manufacturers. 

Data center’s growth is so enormous that giant operators like Microsoft, Alphabet Inc. (GOOGL), Meta Platforms Inc. (META) and Amazon.com inc. (AMZN) have already collaborated with nuclear energy producers in order to mitigate the need of massive electricity for data centers. 

Here we focus on five nuclear energy stocks with a favorable Zacks Rank. These are Constellation Energy Corp. CEG, BWX Technologies Inc. BWXT, Dominion Energy Inc. D, American Electric Power Co. Inc. AEP and NextEra Energy Inc. NEE. 

Huge Demand for Power

A research report by Rystad Energy predicted that the combined expansion of traditional and AI-driven data centers, along with chip foundries, will increase the cumulative demand for U.S. electric power by 177 TWh from 2023 to 2030, reaching a total of 307 TWh. In December 2024, the US Department of Energy (DOE) reported that data center energy usage will “double or triple by 2028,” after doubling over the past decade. 

The chart below shows the price performance of our five picks year to date. 

Image Source: Zacks Investment Research

Constellation Energy Corp.

Constellation Energy is a leading energy company in the United States with a significant thrust on clean energy, especially nuclear energy. CEG’s strategic $5.1 billion capital expenditure through 2025 should help acquire nuclear fuel and increase inventory levels. 

CEG aims to eliminate 100% of greenhouse gas emissions by leveraging innovative technology. CEG carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Constellation Energy is an industry leader in operating nuclear plants safely, efficiently and reliably. Its nuclear fleet capacity factor was an impressive 94.6% in 2024 compared with 94.4% last year. This indicates continued strong production in the current year. 

The acquisition of NRG Energy’s 44% ownership stake in the South Texas Project Electric Generating Station is a 2,645 MW, dual-unit nuclear plant located about 90 miles southwest of Houston, this should further help CEG to expand operations in Texas.

In late 2024, Microsoft entered into a 20-year agreement with CEG to revive the Three Mile Island nuclear plant in Pennsylvania. The $1.6 billion investment aims to restart the reactor, which has been dormant since 2019, to provide carbon-free electricity for Microsoft’s expanding data centers. CEG expects to increase nuclear output by 160 MW at Byron and Braidwood, with investments of $800 million through 2029 for required low-pressure turbine replacements.

Constellation Energy has an expected revenue and earnings growth rate of -9.7% and 8.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% in the last 30 days.

BWX Technologies Inc.

Zacks Rank #2 BWX Technologies manufactures and sells nuclear components in the United States, Canada, and internationally. BWXT operates through two segments, Government Operations and Commercial Operations.

BWXT supplies precision manufactured components and services to the commercial nuclear power industry. BWXT offers technical, management and site services to governments in complex facilities and environmental remediation activities.

BWXT has landed deals and partnerships with the U.S. Department of Defense to help build a cutting-edge micro-nuclear reactor. It is also working alongside key commercial nuclear energy companies such as GE Vernova and SMR standout TerraPower.

BWX Technologies has an expected revenue and earnings growth rate of 11.6% and 5.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.4% in the last 30 days.

PG&E Corp.

Zacks Rank #2 PG&E is engaged in the sale and delivery of electricity and natural gas to customers in northern and central California, the United States. PCG generates electricity using nuclear, hydroelectric, fossil fuel-fired, fuel cell, and photovoltaic sources. PCG serves residential, commercial, industrial, and agricultural customers, as well as natural gas-fired electric generation facilities.

PCG owns and operates interconnected transmission lines, electric transmission substations, distribution lines, transmission switching substations, and distribution substations, and natural gas transmission, storage, and distribution system consisting of distribution pipelines, backbone and local transmission pipelines, and various storage facilities. 

PG&E has an expected revenue and earnings growth rate of 7.3% and 10.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% in the last 60 days.

American Electric Power Co. Inc.

Zacks Rank #3 (Hold) American Electric Power owns the United States’ largest electricity transmission system, with 40,000 circuit miles of transmission lines. To strengthen its grid, AEP plans to invest $54 billion over the 2025-2029 period, which is expected to enable it to achieve a long-term earnings growth rate of 6-8%.

Approximately 40% of AEP’s power is generated from coal and lignite, 22% from nuclear energy, 22% from natural gas and oil, and the remaining 16% from renewable sources. AEP expects its commercial load to grow approximately 20% annually over the next three years based on customer contracts signed so far.

AEP has an expected revenue and earnings growth rate of 6.9% and 4.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% in the last 30 days.

NextEra Energy Inc.

Zacks Rank #3 NextEra Energy continues to expand its operations through organic projects and acquisitions. On Dec. 31, 2024, NextEra Energy had approximately 72 gigawatts (GWs) of net generation and storage capacity from a diverse portfolio of assets, primarily including natural gas, wind, solar and nuclear generation facilities and battery storage facilities

NEE continues to work on its strategy of making a long-term investment in clean energy assets. The company expects to be able to add 36.5-46.5 GW of new renewables in the 2024-2027 time frame to the generation portfolio via clean energy investments. NEE has more than 25 GW in the backlog of signed contracts, which provides clear visibility into the ongoing expansion of clean power generation. 

NEE has an expected revenue and earnings growth rate of 20.2% and 7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings remained the same in the last 30 days.

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BWX Technologies, Inc. (BWXT) : Free Stock Analysis Report

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