Over the past year, the hottest American electric power stock has surged by 298%, surpassing NVIDIA

The craze for "AI power generation stocks" continues.

After last week's financial report, Vistra, one of the largest electricity producers and retail energy suppliers in the United States, saw its stock price soar again, with a cumulative increase of 298% in the past year, surpassing Nvidia's 223% increase.

In addition, the cumulative increases in the past year for the largest nuclear power seller Constellation Energy and the largest photovoltaic power seller NRG Energy have also reached 152% and 182% respectively.

The surge in power supply stocks is driven by the high demand for electricity brought about by the construction and operation of AI data centers.

Joseph Dominguez, CEO of Constellation, stated during the company's financial report conference call last Thursday that the interest of data center customers "is something we have never seen in our 20 years."

NRG also mentioned that some data center customers have expressed their desire to triple their existing facility capacity within the next 3 years.

Currently, the expectation of high electricity demand is gradually becoming a reality.

Data shows that in rapidly growing data center hubs such as Texas and the Mid-Atlantic region in the United States, forward electricity prices are already beginning to reflect the tightness of future grid conditions. For example, the full-day forward electricity price in northern Texas for 2026 has already risen by about 13%.

This has also brought substantial expected profits to power generation companies:

During the financial report conference call, Vistra estimated that by 2026, the company's adjusted EBITDA profit could exceed $6 billion, about 24% higher than market institutions' previous expectations. This means that the compound annual growth rate of the company from 2023 to 2026 will reach 13%, significantly accelerating from the 3.8% rate during 2020-2023.

NRG Energy stated that the gross profit of its Texas power generation portfolio could reach $420 million in the coming years, 27% higher than earlier expectations, and the latter's pricing already includes the upward risk of forward electricity prices.

Constellation reiterated its fundamental expectations, expecting an average annual growth of about 10% in adjusted revenue by 2028.

Are "AI power generation stocks" overheated?

However, the more crazy rise than NVIDIA has brought some concerns to investors: Is the "AI power generation stocks" now overheated?

Analysts at investment bank Evercore have selected stocks under the S&P 500 index with an average annual EPS growth rate of 10%, finding that their P/E ratio in 2026 is 20 times.

According to Wall Street estimates, Vistra and Constellation are expected to have average annual EPS growth rates of 33% and 21% respectively from 2023 to 2026, while NRG's average annual EPS growth rate from 2024 to 2026 is 7.6%. The current P/E ratios for the three in 2026 are 17 times, 26 times, and 12 times respectively, overall still at a relatively moderate level.

Some believe that the sustainability of the rise in "AI power generation stocks" depends to a certain extent on how much power producers can sign power purchase contracts with energy-intensive companies and the premium levels of these contracts.

Evercore cited an example where many of Constellation's battery storage facilities have dual units, giving them an advantage in building data centers - assuming that 25% of Constellation's nuclear units can sign power purchase contracts with Amazon and have high premiums in clean and sustainable power, its earnings in 2026 may exceed baseline expectations by 50%.

Furthermore, the U.S. Environmental Protection Agency (EPA) announced a new proposal for stricter carbon emission standards last month, requiring that by 2038, the vast majority of coal and gas-fired power plants in the U.S. must reduce their carbon dioxide emissions by 90% or face closure.

It is believed that once this proposal is passed and implemented, it may further boost the stock prices of clean energy power producers