Constellation Energy (CEG) shares rose about 3% premarket on Tuesday, October 6, to about $276, after Constellation and Alphabet (GOOGL) unit Google announced a power deal covering 3,590 megawatts on PJM, the largest US grid.
Only about a quarter of that is new nuclear power. The rest is a long-term contract on plants Constellation already runs, and that part of the deal matters just as much for the stock.
Two deals in one
- New nuclear: a 20-year power purchase agreement for 890 MW from uprates (upgrades that squeeze more output from existing reactors) at 11 units in Illinois, Pennsylvania and New Jersey. First power is due in 2028.
- Existing fleet: a separate 15-year agreement for 2,700 MW, not tied to a specific plant. Google said it gives Constellation’s operating plants “long-term revenue certainty,” Reuters reported.
- Cloud: a five-year Google Cloud and Gemini Enterprise contract for Constellation’s operations.
- Price: not disclosed (Bloomberg had reported a deal worth $1 billion or more).
The companies said the deal answers PJM’s proposal that data centers “bring your own power” or risk being cut off during peak demand.
Why Google needs this
“We’re committed to meeting our growth responsibly by actively investing in clean, reliable power,” said Amanda Peterson Corio, Google’s global head of energy and power.
The growth is the point. Alphabet spent $44.9 billion on capital expenditure in Q2 2026, double the $22.5 billion a year earlier, and $132 billion over the last four quarters.
Data centers need power before they need chips, and Google is now lining it up from several suppliers: a NextEra restart in Iowa, Southern Co uprates last month, and now Constellation.
What it means for Constellation
Constellation will invest more than $4.3 billion to deliver the uprates (spread over several years). That’s more than its full-year capital expenditure in each of the last three years ($4.11 billion in 2023, $2.60 billion in 2024 and $2.96 billion in 2025) and above the $3.91 billion it spent over the last 12 months.
The difference is that Google’s 20-year contract backs this spending. Add last week’s 690 MW power agreement with Amazon at Calvert Cliffs, including 190 MW of new capacity, and Big Tech is backing expansions at reactors it doesn’t own.
Is the AI premium already priced in?
The multiple has compressed. CEG trades at 13.6x NTM EV/EBITDA, below its 15.3x average since late 2023 and far from its 25.8x peak in January 2025, though that alone does not establish whether an AI premium remains.
The stock was down 24% this year through Monday, even as Alphabet gained 11%, per Reuters.
What to watch
I think the 2,700 MW contract is the underrated part. It provides 15 years of revenue visibility for existing generation, though undisclosed pricing makes the earnings contribution—and how much is already priced in—difficult to assess.
Analysts are still bullish but have cooled. The Street’s mean target is $342, about 28% above Monday’s $268 close, though that’s down from $405 at the end of 2025. Ratings show 13 buys, 6 outperforms and 3 holds, with no sells. The open questions are the undisclosed price and who signs next. Microsoft (MSFT), already a Constellation customer through the Three Mile Island restart, is one to watch.
Want to check whether the market is still discounting Constellation’s AI contracts? Pull up CEG’s EV/EBITDA history and capex trend on TIKR for free, along with Alphabet’s spending curve. Learn more here.
So what is Constellation Energy stock actually worth?
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