Constellation Energy (CEG) stock fell as much as 12% early Monday amid a broader decline in nuclear power stocks following the US government’s rejection of another Big Tech nuclear power agreement late Friday.
Federal Energy Regulatory Commission rejected a proposal from a grid operator PJM to ramp up the amount of power supplied through the grid from Talen Energy (TLN) to an Amazon (AMZN) AI data center. Talen said in a statement on Sunday it believes the FERC “erred” in its ruling, adding the company is “evaluating our options, with a focus on commercial solutions.”
Talen Energy dropped 9% in early trading, while Sam Altman-backed Oklo (OKLO) fell 8%, Centrus Energy (LEU) tumbled 19%, NANO Nuclear (NNE) dropped 10%, Vistra (VST) sank 4% and NuScale Power (SMR) fell 7%.
Even with Monday’s drop, Constellation Energy stock is up more than 90% this year and is among the best performing stocks in the S&P 500.
Big Tech’s interest in nuclear energy has risen substantially as companies look to meet growing demand from power-hungry data centers to run generative artificial intelligence software without falling behind on their climate goals. Amazon, Google (GOOG), and Microsoft (MSFT) have all announced investments in nuclear power.
Constellation entered into a 20-year deal with Microsoft in late September to supply power to one of its AI data centers. The stock is up 36% from three months ago, as the Microsoft deal and Big Tech’s growing interest in nuclear power have sent shares soaring.
Constellation Energy also on Monday reported third quarter adjusted earnings per share of $2.74, ahead of Wall Street’s forecast of $2.65, according to Bloomberg consensus estimates. Its quarterly revenue of $6.6 billion also surpassed the $5.2 billion expected by analysts.
“The importance of AI and the data economy to America’s economic competitiveness and national security can’t be overstated, and Constellation will do our part to meet the moment,” Constellation CEO Joe Dominguez said in a statement Monday.
Still, red tape plagues the industry. Nuclear projects have been subject to stringent regulations in response to high-profile global nuclear meltdowns at Three Mile Island in 1979, Chernobyl in 1986, and Fukushima in 2011.
On average, it takes the US Nuclear Regulatory Commission 80 months to approve nuclear plant construction in the US, according to research cited by Canaccord Genuity.
The FERC said in its filing Friday that it rejected the Amazon nuclear power agreement due in part to concerns that it could threaten the reliability of the power grid and raise energy costs for the public.