We recently compiled a list of the Jim Cramer Talked About These 9 Nuclear Power and Quantum Computing Stocks. In this article, we are going to take a look at where Constellation Energy Corporation (NASDAQ:CEG) stands against the other nuclear power and quantum computing stocks.
Jim Cramer, host of Mad Money, recently cautioned investors about the risks of speculating in sectors like nuclear power and quantum computing, suggesting it could take a long time before these fields generate meaningful returns. While Cramer acknowledged the optimism that accompanies the start of each new year, he pointed out that sometimes the enthusiasm surrounding certain industries is misplaced.
“This year, I see two themes that I want to caution people about: nuclear power and quantum computing. Both have promise, someday, but that day is not, just not near enough to justify the current valuations for these stocks.”
He clarified that while he does not view quantum computing as a hoax, he considers the current expectations surrounding the technology to be overly ambitious. The market, according to Cramer, is setting a low bar for progress in this area.
READ ALSO 10 S&P 500 Stocks on Jim Cramer’s Radar and Jim Cramer Discussed These 7 Stocks
“Look, I believe in nuclear power, but when GE Vernova, the company that arguably has the most to gain from it, says discouraging things about an uptick in commercial nuclear power coming any time soon, when quantum computing seems very much in its infancy, well, I fear people will get hurt speculating on even the biggest companies, let alone the smaller ones.”
The outlook for quantum computing became more uncertain last week when Nvidia CEO Jensen Huang stated that “very useful” quantum computers are at least a decade away. During a Q&A at Nvidia’s Consumer Electronics Show Financial Analyst event, Huang suggested that 15 years might be an optimistic estimate, while 30 years could be more realistic. This timeline left little room for optimism among investors who had hoped for quicker breakthroughs.
Cramer acknowledged the speculative nature of these sectors but advised investors to be cautious and realistic about the potential for short-term gains.
“You can speculate of course, but please understand that, like at all New Years, the animal spirits are in play for a few stocks and I don’t want you to be trampled by wayward bulls with visions of riches in front of their greedy eyes. You own Rigetti?… Take some gains and then go out and buy yourself a nice cashmere sweater.”
Our Methodology
For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 2. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close up of a wind turbine producing electricity as the sun sets.
Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 78
While Cramer mentioned Constellation Energy Corporation’s (NASDAQ:CEG) advances related to nuclear power, he mentioned that the stock is ahead of itself.
“Right now, there are two utilities that generate a lot of nuclear power, Vistra and Constellation Energy, the latter of which just got a big contract with the feds, $1 billion, to expand a nuclear site. The big utilities are frantically trying to meet power demand generated by the data center revolution. I think these two stocks are now way ahead of themselves. They trade like they’ll be able to build many nuclear reactors next to the currently approved ones because siting won’t be difficult.
Oh, that’s true but building them will be. It takes ages to construct one of these things, big overruns. Constellation’s reopening a decommissioned Three Mile Island plant with Microsoft signing a contract for 20 years worth of power. That does sound great, but I think the process of restarting a dead nuclear power plant won’t be easy. But hey, at least Constellation and Vistra’s real, even if their stocks have gotten overextended.”
Constellation (NASDAQ:CEG) is a U.S. energy company that generates and sells electricity, utilizing a diverse mix of nuclear, wind, solar, natural gas, and hydroelectric resources. It has a significant presence in the nuclear energy sector, as highlighted by its performance in the third quarter when it generated more than 41 million megawatt-hours from its nuclear plants.
In January, the company secured a big contract with the U.S. government, being awarded $1 billion in agreements to supply nuclear power to federal agencies. According to the U.S. GSA, the deal, which will start on April 25, is set to provide more than 10 million megawatt-hours of electricity over a 10-year period. The agreement also offers Constellation the opportunity to extend the operational life of its current nuclear plants, while allowing for investments in new equipment and technology to boost output by around 135 megawatts.
Constellation’s (NASDAQ:CEG) nuclear energy capabilities have recently been further strengthened by a long-term power purchase agreement with Microsoft. In 2024, Microsoft entered into a 20-year deal with the company to help fund the revival of the Three Mile Island nuclear plant, located near Harrisburg, Pennsylvania. This agreement is integral to the development of the Crane Clean Energy Center, which will serve to generate 835 megawatts of carbon-free energy. This energy will be used to power Microsoft’s data centers within the PJM interconnection.
Overall CEG ranks 4th on our list of the nuclear power and quantum computing stocks Jim Cramer recently talked about. While we acknowledge the potential of CEG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CEG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
