A surprising surge in the stock market caught many off guard last month, as shares of Vistra, a prominent retail electricity and power-generation company, skyrocketed by 38.8%. This remarkable upswing was largely fueled by an unexpected announcement from a rival company, Constellation Energy.
Constellation’s stock price jumped 32.2% in September, primarily due to its groundbreaking 20-year power purchasing agreement with tech giant Microsoft. The deal involves powering Microsoft’s data centers with energy from Constellation’s Three Mile Island nuclear power plant, reportedly at a rate of up to $115 per megawatt-hour (MWh). This figure is significantly higher than Vistra’s total realized price of $51.2 MWh in its most recent quarter.
Vistra’s impressive nuclear power capacity, which includes 6,400 MW from its existing facilities and an additional 4,000 MW acquired through the purchase of Energy Harbor in March, has investors buzzing. The company’s recent acquisition of the remaining 15% of Vistra Vision, a subsidiary housing its nuclear-generation facilities, renewables, and energy storage businesses, further bolsters its exposure to clean energy-powered electricity.
The driving force behind this trend is the growing demand for long-term power from leading cloud service providers like Amazon Web Services, Microsoft Azure, and Alphabet’s Google Cloud, which are increasingly reliant on artificial intelligence (AI) applications. As a result, companies like Vistra are well-positioned to capitalize on this emerging trend, potentially securing lucrative deals that could significantly boost their earnings and cash flow forecasts.
While traditional metrics may suggest that Vistra’s stock is pricey, a single major long-term deal could send Wall Street analysts scrambling to reassess their models and upgrade their forecasts. If the AI revolution continues to gain momentum, Vistra’s stock could be poised for significant growth.
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