Caution for Utility Stocks: Political Factors May Impact Stock Returns.
- Political Backlash: Early indications of a political backlash against utility companies have emerged in New Jersey and New York.
- Sector Challenges: This situation may signal a challenging year ahead for the utility sector as public sentiment shifts.
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- Earnings Announcement: Constellation Energy is expected to report its fourth-quarter and full-year earnings before February 20, with analysts projecting adjusted earnings per share between $3.03 and $3.43, reflecting strong growth in its nuclear and commercial performance.
- Performance Growth: In its last earnings report, Constellation posted adjusted earnings of $3.04 per share, an 11% increase from $2.74 in the previous year, indicating significant operational efficiency improvements in its nuclear fleet, as highlighted by the CEO's remarks on operational and financial execution.
- Acquisition Impact: The $26.6 billion acquisition of Calpine is anticipated to boost Constellation's earnings by over 20% this year, strategically enhancing its market position in both nuclear and natural gas sectors.
- Investment Plans: The U.S. Nuclear Regulatory Commission has approved a license amendment for the Limerick Clean Energy Center, paving the way for over $500 million in investments to modernize and upgrade these facilities, ensuring their reliability for decades to come.
- High Costs of Orbital Data Centers: Short seller James Chanos highlighted that the annual electricity cost per MW for orbital data centers is around $600,000, which constitutes about 5-7% of revenues from recently announced deals, raising doubts about their economic viability.
- Warning Against Industry Hype: Chanos cautioned stakeholders against falling for the hype surrounding orbital data centers, urging them to provide actual cost figures and savings to better assess the potential benefits of AI computing in space.
- Abundant Power in the US: He noted that power supply is abundant in the US, particularly when energy companies partner with private power producers, although grid power permitting remains an issue that is being addressed.
- FCC Invites SpaceX Commentary: The Federal Communications Commission (FCC) has invited SpaceX to comment on its orbital data center plans, which include deploying over 1 million non-geostationary satellites 500-2000 km above Earth, indicating regulatory interest in this sector.
Energy Stocks Performance: Energy stocks have underperformed over the past five years due to a disconnect between consumer spending and investor capital flow, with most investment activity occurring in upstream sectors like infrastructure and power generation.
Investment Strategies: Institutional investors are focusing on long-term growth tied to carbon-free generation and data center demand, while also considering the stability of existing fossil fuel systems for immediate income.
Company Highlights: Energy Transfer and Constellation Energy are highlighted as key players, with Energy Transfer offering high yields tied to existing fossil fuel systems, and Constellation leading in clean energy production and nuclear generation.
Market Outlook: Analysts suggest that both Energy Transfer and Constellation Energy present compelling investment opportunities, with expectations of significant growth and stability in cash flows, making them attractive for investors looking to capitalize on the energy transition.
- Portfolio Restructuring: Billionaire hedge fund manager Daniel Loeb reshuffled his Third Point LLC portfolio in Q4 2025, adding several new consumer and international investments, indicating a pursuit of market diversification.
- Reduced Mega-Cap Exposure: In the latest Form 13F filing, Loeb trimmed stakes in select mega-cap and semiconductor names, reflecting a cautious stance towards these sectors, possibly due to concerns over market volatility.
- New Buy Highlights: Among the new acquisitions, Loeb focused on consumer goods and international markets, likely aiming to capture opportunities arising from global economic recovery and enhance the growth potential of his portfolio.
- Regulatory Transparency: Loeb's portfolio changes are disclosed through the 13F filing as required by the U.S. Securities and Exchange Commission, increasing transparency for the hedge fund and helping investors better understand its investment strategies and market outlook.
- Chipotle Investment: Daniel Loeb's Third Point acquired a position worth over $174 million in Chipotle during Q4 2025, despite the stock's decline of over 5% in the last quarter, with analysts maintaining buy ratings and an estimated 18% upside potential.
- Spotify Position: Loeb invested $58 million in Spotify in the same quarter, which saw a drop of more than 16%, yet finished the year nearly 30% higher, indicating market confidence in its growth, with analysts suggesting a potential increase of over 42%.
- Union Pacific Stake Increase: Loeb also more than doubled his position in Union Pacific, raising its value to over $418 million, making it the fund's fifth-largest holding, reflecting a positive outlook on the railroad sector despite challenging market conditions.
- New and Reduced Positions: In addition to increasing stakes, Loeb established new positions in Constellation Energy and Alibaba while selling off shares in Flutter, Meta, and Talen Energy, demonstrating a strategic adjustment of his portfolio amid market volatility.










