This is a watershed moment in the history of the U.S. nuclear industry. Constellation Energy plans to restart the Three Mile Island nuclear power plant, which is expected to resume operation in 2028, subject to approval by the Nuclear Regulatory Commission. The company’s shares soared nearly 20% on the news. Microsoft’s deep pockets will breathe new life into the plant. The company has signed a 20-year contract to buy clean electricity from the plant to offset emissions from its artificial intelligence data centers. The Three Mile Island restart is not just a milestone for Constellation. It shows the expanding economic opportunities that nuclear power brings to utilities and their investors. There is only one power sector stock hotter than Constellation right now. Vistra Corporation shares soared more than 14% after Friday’s Three Mile Island announcement. VST YTD Mountain Vistra Shares, YTD The suburban Dallas-based utility is seen as one of the leading candidates to win a nuclear contract for a data center next. Vistra Leads the Market Shares of previously unknown Vistra have soared more than 175% this year, overtaking AI chip giant Nvidia to lead the overall S&P 500 index in its foray into data centers. Vistra completed its acquisition of Energy Harbor for $3.4 billion in March, along with two nuclear plants in Ohio and one in Pennsylvania. The overall utilities sector is up about 25% this year, driven in large part by data center demand trends. Investors can capitalize on this trend by buying regulated utilities rather than independent power producers like Vistra, which distribute power based on economics, said Sharia Pourreza, senior managing director of North American power and utilities at Guggenheim Securities. Jefferies covered Vistra with a buy recommendation earlier this month and named the company a best-in-class stock in the power sector. Wall Street analysts have set an average price target of $116.89 per share, implying a 26% increase from Thursday’s closing price of $92.52, according to FactSet data. VST NVDA YTD Line Vistra vs NVIDIA “Years of acquisitions, rationalization and risk lessons have positioned Vistra well in today’s power market,” Jefferies analysts led by Julien Dumoulin-Smith wrote in a client note earlier this month. “Vistra’s timely acquisition of Energy Harbor nuclear portfolio in 2023 gives the company a much-needed nuclear portfolio,” the analysts said. Vistra CEO Jim Burke told investors that the company has had numerous discussions with customers about powering data centers directly from its nuclear plants and is “in due diligence on several facilities.” Burke specifically cited the 2.4 gigawatt twin-reactor Comanche Peak nuclear plant outside Fort Worth, Texas. “There’s interest in Comanche Peak,” Burke told analysts on the company’s second-quarter earnings call in August. Other utilities that could benefit from rising nuclear demand from data centers include NextEra Energy and Dominion Energy. NextEra CEO John Ketchum told investors in July that the company is considering restarting the Duane Arnold nuclear plant in Iowa. “If we could do something with Duane Arnold, there would be an opportunity and there would be a lot of demand from the market,” Ketchum said on NextEra’s second-quarter earnings call. NextEra was up just 1.4% on Friday but has risen 37% so far this year. The utility has the equivalent of a buy from 62% of Wall Street analysts, according to FactSet, while the stock is trading roughly in line with Wall Street’s average price target of $83.94 a share. Dominion Energy CEO Robert Blue told investors the company would consider locating a data center next to the Millstone nuclear power plant in Waterford, Connecticut. Dominion has risen more than 22% this year, but about 80% of Wall Street analysts do not own the company’s shares right now.
The utility could overtake Nvidia and land another nuclear deal after Three Mile Island
By NvidiaDaily
