Alphabet has agreed to purchase 20 years of nuclear power from Constellation Energy, a move aimed at securing reliable energy for its expanding data center network. The agreement includes 890 megawatts of new power that Constellation Energy must build out, requiring a capital investment of $4.3 billion. This deal is part of a broader trend where technology giants are turning to nuclear sources to meet the massive and consistent power demands of artificial intelligence infrastructure.
The partnership is not isolated. Amazon recently signed a 690-megawatt deal with Constellation Energy that includes upgrades to existing facilities and new generation. Alphabet also maintains standing agreements with NextEra Energy to support the restart of the Duane Arnold reactor and to upgrade nuclear plants owned by Southern Company. These contracts reflect a strategic shift as data center operators seek to bypass grid constraints and long wait times for conventional power connections.
Despite the influx of contracts, utility stocks have faced headwinds. The S&P utility index is down more than 6% year to date, while Constellation Energy shares are down 24% year to date. Analysts note that rising interest rates and regulatory constraints on rate increases are limiting the sector's performance, even as demand for electricity surges. The power sector has become a significant bottleneck in the AI buildout, with turbine manufacturers reporting they are sold out for eight to ten years.
In related market developments, Bank of America's Savita Subramania suggested that the trade favoring AI capital expenditure beneficiaries over white-collar threatened industries may be reaching saturation. She argued that it is dangerous to underestimate US consumer appetite and that capex strength may be more priced in than not, advising investors to be more selective. Meanwhile, President Trump signed an executive order allowing road vehicles to use red-dyed diesel and deferring the federal road tax on diesel. This measure aims to provide relief as diesel prices hit all-time highs, though economists question whether the savings are sufficient to offset costs that have risen by approximately $700.
Additionally, reports indicate that Chinese AI developers DeepSeek and Moonshot are securing new funding. DeepSeek is close to securing $12 billion from investors including CATL and Tencent, while Moonshot is eyeing a $5 billion raise at a higher valuation with potential IPO plans for Q1 in Hong Kong. These fundraising efforts occur alongside OpenAI's reported pursuit of a $30 billion round anchored by MGX from Abu Dhabi, highlighting the intense competition for capital in the global AI landscape.