Talen Energy reported better-than-expected third-quarter earnings and revenue early Thursday while announcing it is "moving forward" with Amazon.com on "commercial solutions" in the aftermath of federal regulators recently rejecting a $650 million nuclear deal between Talen and Amazon.
Houston-based Talen Energy saw Q3 EPS of $3.16, up from a $1.30 loss a year ago, with sales increasing 26% to $650 million. Analysts expected earnings of 26 cents per share and revenue totaling $522 million.
Talen also raised and narrowed its 2024 adjusted EBITDA guidance to $750 million-$780 million, compared to its previous $720 million-$780 million view. The company also now projects adjusted free cash flow to come in between $265 million-$285 million, vs. its earlier $245 million-$285 million view.
Meanwhile, Talen continues to expect 2025 adjusted EBITDA of $925 million-$1.175 billion and adjusted free cash flow of $395 million-$595 million.
"We are obviously disappointed with the FERC's recent decision on the Susquehanna ISA. That said, we are moving forward with AWS on commercial solutions," Talen Chief Executive Mac McFarland said in the earnings release Thursday.
McFarland's statement is the latest sign from nuclear energy providers that they are brushing off the recent regulatory decision.
Talen Energy stock jumped early before fall 1.6% to 203.24 during market trade on Thursday. Talen stock has surged more than 220% in 2024.
Fellow nuclear utility play Constellation Energy reported better-than-expected third-quarter earnings and revenue while narrowing its 2024 profit expectations earlier this month.
S&P 500 leader Vistra topped third-quarter revenue expectations last week, giving initial 2025 guidance and announcing an additional $1 billion for its share repurchasing program.
Nuclear energy-related stocks have taken off since Constellation Energy announced on Sept. 20 a two-decade contract with Microsoft to provide nuclear power for the tech giant's data centers.
Nuclear Stocks Brush Off FERC
Amazon in March made an early move toward using nuclear as a power source for its data centers. It agreed to pay $650 million for a Talen Energy nuclear-powered AWS data center campus located at TLN's Susquehanna plant in Pennsylvania.
However, utilities American Electric Power and Exelon lodged protests against the deal, saying it bypassed federal charges incurred by grid operators.
In response, the Federal Energy Regulatory Commission on Nov. 1 rejected the deal, citing possible "huge ramifications for both grid reliability and consumer costs," FERC Commissioner Mark Christie said in a statement.
Electric utilities, especially those with nuclear power plants, have seen demand and prices soar amid a rapid build-out of energy-intensive AI data centers. The FERC order suggests that regulators, worried about the "ramifications" of that build-out, may block or restrict at least some co-location deals.
Following the decision, Bloomberg reported that Amazon intends to move forward with the Talen project despite the FERC ruling.
"We are exploring the whole suite of commercial and legal solutions to facilitate full development of the Susquehanna campus as well as progressing other opportunities across our fleet. This includes filing a motion for FERC rehearing in parallel with AWS contract discussions," McFarland said on Thursday's conference call.
Constellation Energy Chief Executive Joe Dominguez said the Nov. 4 earnings call that the ruling is "not the final word from FERC on co-location" of data centers at nuclear power plants.
"We know this co-location and competitive markets remains one of the best ways for the U.S. to quickly build the large data centers that are necessary to lead on AI," Dominguez said.
Vistra also signaled it is continuing to pursue co-location deals.
"We're also with one customer,
Vistra's chief strategy and sustainability officer Stacey Dore said on Nov. 7 the company was in early conversations with some developers about adopting a portfolio approach.
"We might be able to pursue co-location deals at multiple sites and combine that with even building some new generation," Dore said. "We're in pretty detailed customer discussions at some of our nuclear sites."
AI And Nuclear Energy
So far in 2024, nuclear power and utility stocks have been riding the artificial intelligence energy wave.
Artificial intelligence — and the data centers powerful enough to allow them to 'train' themselves — are expected to boost energy demand throughout this decade. In the U.S., McKinsey & Co. projects that data center energy demand will grow from around 4% currently, as percentage of total energy demand, to 11%-12% by 2030.
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Many technology companies are investing in or partnering with nuclear power providers to ensure energy supplies for their data centers.
In October, Amazon.com and Alphabet also announced decisions to invest in developing the emerging small modular reactors, or SMRs, technology. No operating SMRs currently exist, but there are a number of companies developing the technology.
Oracle also announced plans in September to build a gigawatt-scale data center powered by three SMRs.
Morgan Stanley analysts have proclaimed in recent months that a "nuclear renaissance" is underway.
They wrote that nuclear power, while still a divisive issue, is making a comeback. The firm sees $1.5 trillion in investment in new capacity through 2050.
Meanwhile, Morgan Stanley analysts wrote that the Constellation-Microsoft deal "proves out the value of nuclear power for hyperscalers, with higher prices for future deals."
Meanwhile, a number of Republicans and Democrats have signaled support for nuclear power. The Biden administration this week set out plans for the U.S. to triple its nuclear energy capacity by 20250.
However, President-elect Donald Trump has voiced caution. Trump told Joe Rogan in a late October interview that he believes large nuclear reactor projects are too complex, expensive and that "there's a little danger in nuclear."
However, Trump said at an August rally that "starting on day one, I will approve new drilling, new pipelines, new refineries, new power plants, new reactors and we will slash the red tape."
"We will get the job done. We will create more electricity, also for these new industries that can only function with massive electricity," Trump said.
Oklo Earnings
Along with Talen Energy, Oklo — the nuclear power startup backed by OpenAI head Sam Altman — announced third-quarter earnings after the market closed Thursday.
Oklo reported that through the end of Q3 it has a net loss of $63.3 million. The company also reiterated its full-year estimate of an operating loss of $40 million-50 million.
For Q3, Oklo reported a loss of 8 cents per, in line with analyst expectations. The company also reiterated that its first Aurora powerhouse is expected to be operational by 2027.
Oklo shares fell around 1% after the market closed Thursday after gaining 3.5% during regular market trade.
The Santa Clara, Calif.-based Oklo announced Wednesday that it has received letters of intent and is partnering with "two major data center providers" to deliver up to 750 megawatts for "data centers across the U.S." Oklo said that with these deals its customer pipeline is approximately 2,100 megawatts, up from 1,350 megawatts at the end of Q2 and 700 megawatts in July 2023.
In August, Oklo reported that through Q2 it had a net operating loss for the year of $25.1 million. For the full year, Oklo forecast an operating loss of $40-$50 million.
Nuclear Stocks Take Off
Small modular reactor-focused companies have taken off recently. Shares of Oklo retreated this month after surging 177% in October. However, Oklo stock remains up 242% since the Constellation Energy-Microsoft announcement.
Nano Nuclear Energy has advanced more than 18% in November after gaining 35% last month.
Meanwhile, NuScale Power has added 21% this month, building on a 65% in October. NuScale Power reported on Nov. 7 $500,000 in third-quarter revenue, down from $7 million a year ago. SMR saw a loss of 18 cents per share in the third quarter, down from a 22 cent per share loss in Q3 2023. Analysts expected a loss of 14 cents per share and revenue totaling $3.9 million.
SMR shares also rallied early Thursday before ending the day down 1.3%.
Constellation Energy executives told analysts on Nov. 4 that they "continue to lead research on new nuclear energy designs such as our SMRs and for natural gas with sequestration."
Talen Energy stock has a 91 Composite Rating out of a best-possible 99. Shares also have a 98 Relative Strength Rating and a 44 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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