Shares of nuclear-power producers fell after regulators dealt a blow to an Amazon.com effort to use more nuclear energy, one of several as technology giants turn to the power source to fuel the rapid development of artificial intelligence.
The Federal Energy Regulatory Commission late Friday blocked a request by Amazon and Talen Energy to siphon more electricity from a Pennsylvania nuclear plant to one of the internet retail company’s data centers. Shares of Talen fell as much as 9% early Monday before recovering midday to trade down 3.3%, at $168.15.
Talen said it believed FERC had erred, and that the company was evaluating options with a focus on commercial solutions.
The news hit other nuclear-heavy power companies, whose stocks have surged as Amazon, Alphabet’s Google, Microsoft and other tech companies have inked deals to use carbon-free nuclear power to meet increasing AI-fueled demand for electricity.
Shares of Constellation Energy, which plans to restart Pennsylvania’s Three Mile Island power plant to sell electricity to Microsoft, tumbled 11%, despite the company Monday beating market expectations with its quarterly earnings and boosting its outlook. Shares of Vistra, Centrus Energy, NuScale Power and Public Service Enterprise Group also were hit early Monday.
Despite the negative stock reaction, analysts said FERC’s ruling was a minor setback in the overall industry’s push to capitalize on the around-the-clock energy source amid a heated AI race.
Talen can still restructure its expanded deal with Amazon, according to Oppenheimer analysts, and can already supply some power under the existing agreement. Though the setback creates more potential costs and increases uncertainty, the analysts said they still expect the Amazon Web Services data-center deal will go through.
FERC’s rejection appeared to be more about technical issues than broader policy, UBS analysts said in a research note.
We “believe investors should focus on the strong fundamental backdrop…and see through the noise created by the FERC ruling,” the analysts said.
Nevertheless, Constellation was on pace for the stock’s largest percent decrease on record, and was the worst performer of the S&P 500 as of mid-morning. It recently traded down 11%, at $229.61.
Public Service Enterprise Group also was on track for its largest percent drop since March 2020. Shares were down 5.9%, to $84.45.
Write to Ben Glickman at ben.glickman@wsj.com
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