Shares in Vistra (NYSE: VST) According to data from S&P Global Market Intelligence, the economy will grow by a whopping 257.9% in 2024. The company started the year as an integrated retail electricity and power generation company, and ended the year by becoming one of the year’s hottest artificial intelligence (AI) plays on the market.
The boom in AI applications in 2024 brought with it the associated need to invest in data centers to support that growth. I’ll get to Vistra’s role in a moment – first a few words about how nuclear energy became popular in 2024.
There is a critical need to secure a reliable, long-term energy source for data centers, and nuclear power is increasingly seen as the answer. Nuclear energy is seen as a carbon-free way to ensure reliable energy, and has become even more popular given the challenges of renewable energy in recent years, including rising costs, logistics issues and supply chain constraints.
Indeed, it is no coincidence that the three main cloud service providers have signed agreements with nuclear energy producers in 2024. Microsoft has entered into a long-term power purchase agreement Constellation Energy to restart part of the Three Mile Island nuclear power plant. Alphabet‘s Google has signed a deal to buy nuclear power from small modular reactors (SMR) developed by Kairos Power.
In the meantime, AmazonAmazon’s Amazon Web Services paid $650 million to buy a data center campus Languages Energy and signed a long-term agreement to buy power from the nearby Talen nuclear power plant. Amazon also signed agreements to support the development of SMRs. While the Amazon/Talen deal took a hit when the US Federal Energy Regulatory Commission rejected a proposal that would have allowed Talen to sell more power to Amazon, the IT giant has subsequently reaffirmed its commitment to the original equipment.
The company started the year with just 2,400 megawatts (MW) of its 36,702 MW of generation capacity coming from nuclear power, but added significantly to that figure with the completion of an agreement to acquire Energy Harbor in March, adding 4,000 MW of nuclear generation capacity added. Vistra would then acquire the remaining 15% it did not own in Vistra Vision (which owned, among other things, its nuclear assets).
The deal was perfect timing and investors now expect Vistra to also sign a lucrative long-term power supply agreement with a data center operator. That’s something to watch out for.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Lee Samaha has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Alphabet, Amazon and Microsoft. The Motley Fool recommends Constellation Energy and recommends the following options: long calls in January 2026 for $395 at Microsoft and short calls in January 2026 for $405 at Microsoft. The Motley Fool has a disclosure policy.
Here’s Why Vistra Was a Top Performer in the S&P 500 in 2024, originally published by The Motley Fool
