Constellation Energy tops profit estimates on robust data center-driven power demand

By Pooja Menon and Vallari Srivastava

Feb 24 (Reuters) - Major U.S. power company Constellation Energy CEG.O beat Wall Street estimates for fourth-quarter adjusted profit on Tuesday, helped by rising electricity demand from data centers, sending shares up 4% in morning trading.

U.S. power consumption is expected to rise through 2027 after setting a record high for a second straight year in 2025, the Energy Information Administration said in its Short-Term Energy Outlook last month.

Much of the demand surge is driven by rapid AI and crypto data-center buildouts, along with households and businesses shifting to electric heating and transportation.

"With the nation's largest nuclear fleet at the core of our strategy, we're pairing the grid's most reliable power with flexible resources to meet accelerating demand driven by electrification and the data economy," CEO Joe Dominguez said.

Last month, Constellation signed an agreement with Dallas-based CyrusOne to connect and serve a new data center adjacent to the Freestone Energy Center in Texas.

The utility also has agreements with Meta META.O to keep one of its reactors in Illinois operating for 20 years, and with Microsoft MSFT.O to restart a nuclear reactor at a Pennsylvania plant, formerly known as Three Mile Island.

The company's nuclear fleet produced 45,459 gigawatt-hours (GWh), down from 45,494 GWh a year ago, due to higher planned refueling and non-refueling outage days compared with last year.

Constellation closed its $16.4 billion acquisition of natural gas and geothermal company Calpine Corp in January.

"We see Constellation Energy well-positioned to supply rapidly growing data center demand in 2026, especially with an expanded portfolio in natural gas and ERCOT," said Melius Research analyst James West.

Constellation's total operating expenses increased 22.3% to $5.48 billion in the October-December quarter, while interest expenses were up 25.6% at $113 million.

The Baltimore, Maryland-based company posted an adjusted profit of $2.30 per share for the quarter, compared with analysts' average estimate of $2.23 per share, according to data compiled by LSEG.