Zacks Investment Ideas feature highlights: GE Vernova, Constellation Energy and Nvidia

The article highlights GE Vernova (GEV) and Constellation Energy (CEG) as compelling investment opportunities in the nuclear energy sector, particularly after recent pullbacks, driven by the surging electricity demand from AI data centers. With AI growth projected to increase U.S. electricity demand by 25% by 2030, reliable nuclear power is deemed critical. GEV, having soared 300% since its April 2024 spin-off, offers diversified energy solutions including small modular reactors and projects strong EPS growth, while CEG, the largest U.S. nuclear operator, has surged 525% since early 2022, is expanding through acquisitions like Calpine, and has secured long-term power deals with tech giants like Microsoft and Meta, positioning both to capitalize on the AI-driven energy transition.

Analysis

The burgeoning demand for electricity from AI data centers is creating a significant structural tailwind for the nuclear energy sector, with U.S. electricity demand projected to increase by 25% by 2030 and 75% by 2050. This surge, driven by the AI arms race, underscores the critical need for reliable, always-on, clean power that nuclear energy provides. Recent pullbacks in nuclear-heavy AI energy stocks, including GE Vernova (GEV) and Constellation Energy (CEG), present a strategic entry point for investors.

GE Vernova, a diversified energy technology powerhouse, has demonstrated exceptional growth, soaring 300% since its April 2024 spin-off, significantly outperforming Nvidia's 110% and the Tech sector's 50%. The company is currently trading approximately 20% below its August peaks, offering a potential buying opportunity. GEV boasts a robust portfolio spanning nuclear, natural gas, and electrification, with projected adjusted EPS growth of 34% in FY25 and 71% in FY26, alongside revenue expansion of 6.4% in 2025 and 12% in FY26.

Constellation Energy, the largest U.S. nuclear power plant operator, has also seen substantial appreciation, climbing over 525% since early 2022. CEG's strategic acquisition of Calpine, set to close in Q4, will expand its footprint into key tech-heavy markets like Texas and California, solidifying its position as the largest clean energy firm. The company has secured significant 20-year nuclear power agreements with tech giants like Microsoft and Meta, and anticipates adjusted EPS growth of 9% in 2025 and 21% in 2026, supported by the Nuclear Production Tax Credit.

Key Decisions for Investors

• Consider initiating or adding to positions in GE Vernova (GEV) and Constellation Energy (CEG) on current pullbacks, leveraging the strong structural demand for nuclear power driven by AI data centers.
• Monitor GEV's ability to hold its pre-July breakout levels and CEG's 200-day moving average as potential long-term buying opportunities, given their robust growth projections and strategic market positioning.
• Evaluate the long-term implications of CEG's Calpine acquisition and both companies' advancements in Small Modular Reactor (SMR) technology as key drivers for sustained growth and market leadership in the evolving energy landscape.