Constellation Jumps 12% on Google's 20 Year Nuclear Deal
Constellation Energy closed Tuesday at $300.40, up 12.2 percent, and finished among the top two gainers in the S&P 500. The jump followed a 20 year agreement with Google for 890 megawatts of new nuclear output from plants the company already runs. The S&P 500 closed at a record of 7,819 the same day, and the 10 year Treasury yield eased to 5.27 percent.
The contracted power is still to be built
The full package is 3,590 megawatts on PJM, the grid covering much of the mid Atlantic and the Midwest. Two agreements sit inside that figure.
A 20 year power purchase covers 890 megawatts. Constellation will produce it by upgrading 11 reactors in Illinois, Pennsylvania, and New Jersey. The spend is more than $4.3 billion on turbines, steam equipment, and controls. The first extra electricity is expected in 2028. No new reactor is in the plan. The company says the work holds about 4,400 existing jobs and adds about 7,200 construction jobs while the upgrades go in.
A second agreement runs 15 years and covers 2,700 megawatts from the existing fleet. It books revenue so those plants stay online. A week earlier Constellation agreed to add 190 megawatts at Calvert Cliffs in Maryland for Amazon, about $3 billion of spending, with output aimed at 2030 through 2032. PJM is short about 6.8 gigawatts as data centers arrive. Google reserved supply years ahead.
A 12 percent day made the yield smaller
Shares opened at $291.11, traded as high as $309.80, and closed at $300.40 on about 13.5 million shares. The company is worth about $106 billion. The stock sells for about 29 times trailing earnings and about 24 times forward earnings.
The forward dividend stays $1.71 a year, sent as $0.4265 each quarter. At $300.40 the yield is about 0.57 percent. At the prior close of $267.62 the same check yielded about 0.64 percent. Early Wednesday the shares were back near $294, about 2 percent under the close.
Independent power producers as a group yield around 3.8 percent. Constellation pays out about 16 percent of earnings, and the dividend is up about 10 percent over the past year. The check is covered. It is also small next to a Treasury note. The big utilities ETF rose about 3 percent, and Vistra, Talen Energy, and NRG moved with the group. Buyers priced the contracts. The distribution stayed thin.
A record close with a short list of winners
The S&P 500 rose 0.58 percent to 7,819. That was the first record close since August and the first finish above 7,800. The index is up more than 14 percent in 2026. The Nasdaq also closed at a record. The Dow added about 250 points.
Nvidia is up about 4.5 percent over the past week, trades near a $6 trillion value, and accounts for more than 8 percent of the S&P 500. The seven biggest tech stocks together are worth about $25 trillion. Smaller companies in the Russell 2000 have trailed the S&P 500 over the past month.
The 10 year yield settled at 5.27 percent after a Monday high near 5.35 percent, still around the highest level in two decades. Junk rated companies borrow at a spread over that yield, so refinancing gets expensive once the base rate is already above 5 percent. Brent crude near $100 a barrel keeps fuel costs high in the same week.
Chip buyers are lining up fresh debt
SpaceX is in talks to raise $40 billion to buy Nvidia chips. The package being discussed is about $10 billion of bank loans and $30 billion of investment grade bonds. Apollo is expected to lead the sale, and Pimco is among the bond investors in the room. A close in 2027 has been mentioned. The talks are early enough to end with nothing signed.
SpaceX already sold about $25 billion of bonds after an $86 billion listing in June. Bonds due in 2056 have been trading near 85 cents on the dollar, about 2.27 percentage points over Treasuries. That spread is what junk bonds usually pay. The rating is still BBB, the second lowest step that still counts as investment grade.
Ray Dalio, speaking in Singapore, called the AI boom a classic bubble and said he thinks the market is “close to that” point where it can burst. Debt is funding the build. If rates keep climbing, holders sell assets to turn paper wealth into cash, and that selling is when these booms usually crack. Morgan Stanley has put the outside money needed for AI infrastructure at $1.5 trillion by 2028. The Google deal reserves power on 15 year and 20 year terms. The chip talks borrow to buy the machines that will use it.
What this means for income investors
A 10 year Treasury at 5.27 percent yields about nine times the forward dividend on Constellation. Buyers at $300 are paying for the Google contract and for the Amazon addition at Calvert Cliffs. The quarterly check is a side payment. Investors who need the distribution get more cash from the government bond.
A 3 percent day in the utilities ETF leaves payouts where they were. A generator that can sell more output under a long contract can support a higher share price. A utility with capped rates and debt that resets above 5 percent faces a different bill. The $4.3 billion still has to be funded, and the first new megawatts are scheduled for 2028.
Junk rated borrowers meet a Treasury selloff through wider spreads. AI spending is now large enough to add real supply in those bond markets. A bond at 85 cents, with a spread of 2.27 percentage points, shows a rating and a price that disagree. The S&P 500 can print a record in the same week a power stock yields 0.57 percent. The cash that actually gets paid is the figure that stayed put.