New York’s one-year moratorium on environmental permits for large data centers has thrust power constraints into sharp focus for investors tracking AI-driven electricity demand.
Constellation Energy (NASDAQ: CEG) is now under intensified investor scrutiny as the regulatory clampdown collides with surging demand for reliable, carbon-free power.
CEG shares have declined 7.9% over the past month and 12.2% over the past quarter, reflecting a notable cooling of momentum in the stock.
The one-year total shareholder return has fallen 21.1%, a stark contrast to the very strong three-year total shareholder return of approximately 1.7 times that long-term holders still hold onto.
Despite the pullback, CEG now trades at what analysts describe as a substantial discount relative to estimated fair value targets, drawing fresh attention from value-oriented investors.
The most widely followed analyst narrative places Constellation Energy’s fair value at $360.24, compared to a last close of $252.39, framing the current share price as a significant undervaluation.
That narrative is anchored in growing demand for carbon-free, reliable power from large-scale customers including data centers operated by Meta and Microsoft, as well as corporates such as Comcast.
Digitalization, electrification, and decarbonization goals are seen as structural drivers that could generate new, longer-term, higher-margin contracts carrying price premiums for Constellation Energy.
The $360.24 fair value figure is built on a projected earnings trajectory, expanding margins, a premium future price-to-earnings multiple, and a discount rate of 7.11% applied to long-term cash flow assumptions.
A separate valuation model, the SWS DCF approach, estimates an even wider gap, placing Constellation Energy’s cash flow-based fair value at $512.13 against the current share price of $252.39.
That divergence between the two models raises pointed questions about just how conservative current market pricing truly is, and whether the sell-off has gone beyond what fundamentals justify.
However, Constellation Energy’s heavy reliance on regulated nuclear assets and its concentration in long-term data center contracts could expose the investment thesis to regulatory or customer-driven shifts.
New York’s permitting moratorium is a timely reminder that the regulatory environment surrounding large-scale power consumption remains fluid and presents a tangible risk to demand forecasts.
Investors weighing CEG at current levels must balance the substantial discount implied by both valuation models against the regulatory headwinds now reshaping the data center power landscape across key markets.
