Constellation Energy (CEG) has just closed its US$26.6b acquisition of Calpine, creating a roughly 55 GW clean and conventional generation platform at a time when AI data center power demand is drawing close investor attention.

The latest 7.1% 1 day share price return to US$313.53 and 8.5% 90 day share price return suggest momentum is rebuilding, even after a 14.4% year to date decline. The 3 year total shareholder return above 3x highlights how strong the longer term trend has been.

If you are watching how power demand from AI and data centers could reshape utilities, it may be worth scanning other potential beneficiaries through the 91 nuclear energy infrastructure stocks

With Constellation trading at US$313.53, sitting at a 36% intrinsic discount and roughly 19% below published analyst targets, you have to ask: is there still a buying opportunity here, or is the market already pricing in future growth?

Most Popular Narrative: 21.6% Undervalued

With a fair value estimate of $399.93 against the last close at $313.53, the most followed narrative argues that Constellation’s cash flows justify a higher price, leaning heavily on nuclear and data center driven power demand to support that view.

Strategic investments and progress in nuclear plant restarts (Crane Clean Energy Center), upgrades (900MW in engineering), and selective M&A (Calpine acquisition) provide visible avenues for substantial capacity additions and operational synergies, enhancing EBITDA and free cash flow over the medium to long term.

Curious what sits behind that fair value gap? The narrative highlights measured revenue growth, improving margins, and a richer future earnings multiple than the wider utilities sector.

Result: Fair Value of $399.93 (UNDERVALUED)

However, there are still pressure points, including regulatory and decommissioning costs around the nuclear fleet, as well as the risk that cheaper distributed power eats into centralized demand.

Another View: High P/E Ratios Temper The Undervaluation Story

The earlier fair value work points to Constellation trading about 35.7% below an estimated intrinsic value, yet its P/E near 49x is more than double the Electric Utilities peer average of 21.8x and above a fair ratio of 40.9x. This suggests valuation risk if sentiment cools.

If that premium multiple holds, the discount case may still appeal. However, if the market drifts closer to the 40.9x fair ratio, upside could narrow faster than the DCF style models imply. The key question is which reference point investors should rely on most when weighing that risk and potential reward.

Next Steps

With both upbeat and cautious views on the table, now is a good time to review the full picture yourself and decide how it stacks up for you. To help with that, take a close look at the 2 key rewards and 3 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.