On May 18, NextEra Energy (NYSE: NEE) announced acquiring Dominion Energy (NYSE: D) for ~$67B all-stock — the largest power-sector acquisition since Exxon bought Mobil (1998) and the largest M&A of 2026. The combined NextEra would be the world's largest regulated electric utility (Florida across Virginia into the Carolinas), enterprise value ~$420B, third in US energy behind Exxon and Chevron. Rationale: AI data-center demand has outgrown what even the largest US utility can supply alone; scale is a survival requirement. Prinsights recommended Dominion (December) and NextEra (October 2024). The deal faces FERC/NRC/state regulatory review, with close expected within ~1.5 years.
It lands a week after Fervo Energy's (NASDAQ: FRVO) debut — enhanced geothermal priced at a $7.7B valuation, popped 33% day one (>$10B market cap), Google anchor customer, but a single 500MW Cape Station project (permits 2GW, est. up to 4GW) not yet sending power to the grid.
Washington believes in geothermal: BLM auctioning 68 parcels (~198,000 acres) in New Mexico June 16 (then Utah/Nevada/Idaho); the House passed the HEATS Act (waiving federal drilling-permit requirements); BLM categorical exclusion (small-scale geothermal skips environmental assessment); the One Big Beautiful Bill Act (July) gutted wind/solar credits (must be in service by end-2027) while geothermal/nuclear/hydropower/battery storage keep the full ITC/PTC through 2033 (phase-down to 2036) — Energy Secretary Chris Wright (ex-Liberty Energy, which invested in Fervo) carved geothermal out.
Capacity factor: solar ~25%, wind ~35%, geothermal 70-95%, nuclear ~95% — firm baseload is what data centers and AI campuses need.
Recommendation — Constellation Energy (NASDAQ: CEG): the largest US producer of carbon-free electricity; nuclear fleet ~21 GW across 14 plants (94.7% capacity factor). In January completed the $26.6B (EV) Calpine acquisition (~7.9x 2026 EV/EBITDA): ~27 GW total including the largest US gas fleet (~26 GW, ERCOT/CAISO/PJM) and The Geysers (13 geothermal plants, ~725 MW, world's largest geothermal complex → CEG is the largest geothermal operator in North America); +$2B incremental annual FCF. Combined: 55 GW capacity, 2.5M customers.
Hyperscaler PPAs: Microsoft — Crane Clean Energy Center (Three Mile Island Unit 1), 20-year PPA, 835 MW, 2027 restart (DOE up to $1B loan); Meta — Clinton Clean Energy Center, 20-year PPA, 1,121 MW from June 2027; CyrusOne — Freestone (Calpine gas, ERCOT), 380 MW (February 2026). More than 2,700 MW committed long-duration demand.
Numbers: first full quarter with Calpine — $11.1B revenue, adjusted operating EPS $2.74 (from $2.14); FY26 guide $11.00-12.00 EPS, 20%+ base EPS growth 2026-29; FCF $8.4B (2026-27) rising to $11.5-13B (2028-29); $5B buyback + 10% annual dividend growth.
Risks: the Crane nuclear restart (NRC safety/environmental review, FERC interconnection-transfer from Eddystone opposed by PJM's market monitor) — delays past 2027 would discount the Microsoft revenue; merchant power pricing; Calpine integration; political/regulatory.
Stock ~$289 (25x trailing earnings, ~15x EV/EBITDA); declining peaks ($389 Oct-2025 → $366 Dec → $320 Feb → $313 Apr) on the AI-power-trade reset + Calpine dilution. Buy-up-to $320 (~11% upside; $366 = 27%, $389 = 35%). Action: buy CEG up to $320.