Microsoft Secures 20-Year Nuclear Power Deal at Three Mile Island

On September 20, Constellation Energy's stock surged by 22% following a significant 20-year electricity supply agreement with Microsoft. This deal involves the restart of the undamaged nuclear Unit 1 at Three Mile Island, which had been closed since 2019 due to economic pressures. The agreement is part of a broader trend where tech companies are increasingly seeking clean energy sources to power their operations, particularly as demand for energy in data centers rises. Despite the positive market reaction, Constellation Energy's earnings per share (EPS) forecast for 2024 was raised by only 4.8% to $8, which is still above the consensus estimate. The company reported revenues of $5.48 billion, falling short of analysts' expectations by $70 million. This mixed financial performance has led to speculation about whether the boost in earnings growth targets will translate into better-than-expected revenue growth. Analysts have responded positively to the deal, with several firms raising their price targets for Constellation Energy's stock. Wells Fargo increased its target by 20% to $300, citing strong interest from tech giants in securing clean power. Jefferies raised its target by 40% to $256, reflecting optimism about the company's future prospects in the energy market. The growing demand for clean energy solutions, particularly nuclear power, is seen as advantageous compared to renewable sources, which often require expensive battery storage. As the energy landscape evolves, Constellation Energy is well-positioned to benefit from the increasing focus on sustainable energy solutions among major technology firms.