Constellation’s New Power Deals Are Piling Up. Here’s Why the Stock Isn’t Reflecting It Yet.

Much of the hype surrounding future data center power demand was priced in well in advance. Investors already know that the company has 920 megawatts of new power purchase agreements (PPA) lined up, including a 20-year PPA with Microsoft (MSFT +0.91%) to restart Three Mile Island, now renamed the Crane Energy Center. The company’s 20-year PPA with Comcast (CMCSA +0.37%) and 15-year PPA with Bank of America (BAC -0.32%) were announced in June of 2025 and in 2022, respectively. When Constellation’s deals are made formal, they often meet existing market expectations rather than create positive surprises.

These deals will take time to pay off

Getting approvals from regional grid operators, including the Pennsylvania-New Jersey-Maryland Interconnection (PJM) and the Federal Energy Regulatory Commission (FERC) take time, particularly on nuclear projects. At the state level, regulatory scrutiny has increased. For example, Texas (ERCOT) placed temporary pauses on data center interconnection requests to review grid stability, delaying commercial timelines.

Restarting the Crane Clean Energy Center won’t happen overnight, nor will new PPA deals. Constellation is in the process of getting approval for renewal applications for two New York nuclear reactors, the Ginna Clean Energy Center and the Nine Mile Point Unit 1 reactor.

Crane isn’t expected to supply power until late 2027 or beyond, meaning the cash flows from it are years away from appearing on current income statements.

Constellation’s new 920 megawatts of PPAs are 15 to 20 years in duration and are set to begin between 2029 and 2032.

Constellation’s growth comes with a cost

To expand its capacity, Constellation undertook major corporate moves, including the 2025 acquisition of natural gas and geothermal power provider Calpine for $26.6 billion. While this strategically shifts the company’s revenue mix, the integration has led to a steep rise in total debt and net interest expense.

The company reported $13 billion in debt in the second quarter, up 64% year over year. Its trailing debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio has risen more than 48% over the past year, thanks to the deal. That is a major reason the company’s earnings per share (EPS) were $1.42, down 48% year over year.

Its growth has also led to regulatory compliance hurdles, with the Calpine purchase prompting regulators to require the company to divest the Brazos Valley Energy Center in Texas.

Keep an eye on the long term

These PPA agreements will lead to increased revenue and better earnings. The company already reported revenue of $7.5 billion in the second quarter, up 18.6%, year over year.

The company’s second-quarter adjusted EPS, which excludes interest expense but not principal payments on debt, was $2.55, up 33.5% from the same quarter a year ago.

Despite pushbacks against data centers and increased regulatory scrutiny, the AI data center boom is not going away, and Constellation is set to see long-term growth from it. The stock’s pullback this year presents an excellent long-term proposition for investors. Yes, the company has significant debt, but its stable utility revenue will enable it to pay down that debt and return to profitability within a reasonable time frame.