The Open
Record close. The S&P 500 (SPY) rose 0.55% to its first record close since August, and the Nasdaq-100 (QQQ) added 0.46%. Small caps went the other way: IWM fell 0.72%. The 10-year yield eased to 5.27%.
Power was the trade. Constellation Energy jumped 12.3% and Vistra 10.8% after Google signed a long-term nuclear deal. Smaller nuclear names joined in: Oklo rose 7.2% and NuScale 4.4%.
Scorecard. Nu Holdings rose another 3.2% to $15.66, holding Monday's election gain. Micron slipped 1.7% to $1,045.56, now below where it was before earnings. Accenture is at $193.40.
Featured
Constellation Energy (CEG) — $300.40, +12.3%
The setup: Constellation owns the largest fleet of nuclear plants in the U.S. Today it signed two deals with Google. The first is a 20-year contract under which Google pays to upgrade 11 existing reactors in Illinois, Pennsylvania and New Jersey so they produce 890 megawatts more power. The second is a 15-year deal to supply Google another 2,700 megawatts from Constellation's existing plants. The upgrades are a $4.3 billion project, with the first expected online by 2028.
Last Wednesday, Constellation was on our losers list, down 4% as bond yields rose. Today it led the market.
The number that matters: 890. That's megawatts of new power, close to what one large reactor produces, created without building a reactor. New nuclear plants take a decade or more and often run billions over budget. Upgrading turbines and steam generators at plants that already exist is faster and cheaper, and Google is paying for it.
The thesis: AI data centers need power that runs 24 hours a day, and the big tech companies are now signing 15- and 20-year contracts to lock it up. That turns some of Constellation's output into a contracted income stream instead of a commodity sold at whatever the market pays. Even after today, the stock is 25% below its October 2025 high of $401.70 and down 15% this year, at about 23 times next year's earnings. That's not cheap for a utility, but it's not a peak-hype price either.
What kills this thesis: The upgrades slip past 2028, or grid regulators start limiting how much of the existing plants' output tech companies can lock up. Either one would make these deals harder to repeat, and repeat deals are what the stock is now pricing in.
Movers & Watchlist
Ticker | Move | Last | Take |
|---|---|---|---|
CEG | +12.25% | $300.40 | See Featured. |
VST | +10.77% | $160.50 | Vistra, another big nuclear owner, rose in sympathy. |
ASTS | +8.01% | $63.12 | AST SpaceMobile rebounded after last week's slide. |
MRVL | +5.81% | $287.01 | Marvell rose after earnings. It's up 238% this year. |
ZS | +5.18% | $212.25 | Zscaler is now up about 7% since its 10% drop on Sept. 25. |
KLAC | −4.54% | $197.46 | Chip-equipment makers fell together. |
LRCX | −3.44% | $333.89 | Lam Research slid with KLAC and AMAT. |
CAVA | −2.70% | $52.64 | Restaurants lagged on a record day for the index. |
ABNB | −2.24% | $160.39 | Airbnb slipped. |
AMAT | −2.21% | $530.27 | The third chip-equipment name in the red. |
Quick Hits
Google and Constellation Announce Landmark Agreement to Bring 890 MW of New Nuclear Capacity to PJM Grid — The full announcement, including a side deal for Constellation to use Google's Gemini AI to run its plants.
Marvell just impressed Wall Street with 'good numbers plus a better story' — The custom AI chip maker behind today's 5.8% gain.
Salesforce shares sit at the epicenter of AI confusion. Here's how to trade it — The same "is AI a threat or a tailwind?" question that hit Accenture, applied to software.
Rebounding oil exports through Strait of Hormuz are vulnerable to stepped-up Iranian tanker attacks — Oil is still the swing factor for inflation, and so for bond yields.
P.S. Hit reply and tell me: would you rather own the AI chip makers or the companies that power them? I read every reply.
The Market Letter is for informational and educational purposes only and is not investment advice. We are not a registered investment adviser, and nothing here is a recommendation to buy or sell any security. Markets involve risk, including loss of principal. Do your own research. We may hold positions in securities we cover and will disclose when we do.