Constellation Energy Corporation (NASDAQ: CEG) has drawn significant attention as one of the most watched AI-related energy stocks, buoyed by its strategic focus on supplying power to the rapidly expanding data center sector.
On September 8, Jefferies analyst Paul Zimbardo increased the firm’s price target for CEG to $347 from $293, even as he reiterated a Hold rating. Zimbardo highlighted that while Constellation and other Independent Power Producers have stalled somewhat since their early August earnings reports, with little in the way of major new deals, CEG shares have nonetheless posted a notable 40% gain since early 2023.
Despite the impressive performance—CEG stock recently traded at $323.48—analysts point to a potentially stretched valuation. Zimbardo noted that much of the price surge already reflects anticipated future demand from new and expanding data centers, driven by artificial intelligence and cloud technologies. According to Ainvest.com, Constellation stands out for its risk profile when compared to industry peers but may not offer as much upside given its valuation, which is significantly influenced by its robust nuclear energy portfolio and optimistic growth assumptions.
The Baltimore-based energy provider has made several key moves fueling its recent rise. A pivotal moment was the 20-year power purchase agreement with Microsoft to restart Pennsylvania’s Three Mile Island Unit 1 nuclear power plant. The agreement is expected to supply Microsoft’s data centers with more than 800 megawatts of carbon-free energy, and, as reported by Nasdaq.com, could boost Constellation’s annual earnings growth by a projected 13% through the end of the decade.
Another major strategic expansion was announced in January 2025, with Constellation revealing plans to acquire Calpine Corporation for $16.4 billion. The move, described in detail by Reuters, is expected to add 22 gigawatts to Constellation’s generation capacity and fortify its position as the largest independent power producer in the United States.
However, as Constellation pushes deeper into servicing large-scale AI data centers, regulatory scrutiny has presented new challenges. In May 2025, the company announced a shift in strategy, moving away from direct connection models in favor of projects tied to the broader power grid—a move intended to address regulatory concerns while continuing to meet escalating AI-driven demand. Reuters reported that this adjustment is designed to keep Constellation’s growth plans on track despite the evolving policy landscape.
In conclusion, while Constellation Energy’s bold moves in the data center market have delivered impressive stock performance and positioned it at the center of AI-powered energy demand, financial analysts and investors are weighing the sustainability of its valuation amid ongoing regulatory developments. As Zimbardo and other analysts suggest, further gains may depend on Constellation’s ability to translate strategic initiatives into realized earnings without overextending current growth expectations.