11 AI Stocks That Should Be On Your Watchlist

3. Constellation Energy Corporation (NASDAQ:CEG)

Number of Hedge Fund Holders: 78

Constellation Energy Corporation (NASDAQ:CEG) is an energy provider specializing in clean, carbon-free energy solutions. On January 20, Constellation Energy Corporation was revisited by a Wall Street analyst, Elizabelle Pang from DBS, who maintained a “Hold” rating on the stock with a $300.00 price target. While several factors have led to the hold rating from DBS, a prominent reason is the company’s acquisition deal from Calpine Corporation. The cash and stock deal, reported on January 10^th, has been largely driven by the rapid growth of AI data centers that require huge amounts of energy to power them. The Calpine acquisition deal is anticipated to bring significant earnings improvement from 2026 onwards and also positions the company as the number one power generator in the US by generation output.

Albeit these positive developments, the firm considers the valuation of the company to be rich, trading at a forward price-to-earnings ratio considerably above the historical mean. Additionally, even though there is an increased demand in data center electricity and strategic positioning in key hubs, there are notable risks as well. Some of these risks, noted the firm, include potential extreme weather conditions, uncertainties in policy such as the hydrogen production tax credit, and inflationary pressures on fuel expenses. Due to the above-mentioned reasons, Elizabelle Pang maintains a Hold rating and suggests investors wait for a better entry point regardless of the company’s promising outlook.