NextEra Energy's Strategic Position in the AI-Powered Energy Transition: Nuclear and Data Center Deals Reshape Growth and Valuation

NextEra Energy, Inc. (NEE) has emerged as a linchpin in the U.S. energy transition, leveraging its expertise in renewables and nuclear power to align with the surging demand for electricity driven by artificial intelligence (AI) and data centers. In 2025, the company has accelerated its strategic pivot by securing high-profile partnerships with tech giants like Google and Meta, while restarting dormant nuclear assets. These moves not only redefine NextEra's role in the energy sector but also raise critical questions about its valuation, growth trajectory, and ability to meet long-term investor expectations.

Nuclear Renaissance: Restarting the Duane Arnold Energy Center

NextEra's collaboration with Google to restart the Duane Arnold Energy Center in Iowa represents a pivotal step in its nuclear strategy. This 480-megawatt nuclear facility, mothballed in 2013, is set to resume operations by Q1 2029 under a 25-year power purchase agreement (PPA) with Google. The project, funded by the tech giant, will supply carbon-free energy to power Google's cloud and AI infrastructure while generating $9 billion in economic benefits for Iowa and creating 400 direct jobs.

This partnership underscores a broader trend: tech companies are increasingly turning to nuclear energy to meet their decarbonization goals and insatiable power demands. As noted by BloombergNEF, nuclear energy is gaining traction as a reliable baseload power source for data centers, with NextEra's expertise in project execution and grid integration giving it a competitive edge. The Duane Arnold restart also aligns with NextEra's $74 billion capital expenditure plan through 2029, which prioritizes nuclear, renewables, and storage to address the AI-driven electricity boom.

Co-Developing AI Infrastructure: A New Energy Business Model

Beyond nuclear, NextEra is redefining its role as a co-developer of AI infrastructure. The company has partnered with Google to build gigawatt-scale data center campuses across the U.S., each equipped with dedicated power generation, storage, and AI-optimized grid solutions. These campuses aim to alleviate strain on local grids while ensuring a stable, clean energy supply for hyperscalers.

This shift from traditional utility operations to integrated energy-AI infrastructure marks a strategic repositioning. As highlighted in a report by GlobalData, energy companies are now competing to become "energy-as-a-service" providers, bundling generation, storage, and compute resources to meet the hyper-specific needs of AI workloads. For NextEra, this model offers higher margins and long-term revenue visibility through PPAs and co-development fees.

Financial Implications: Revenue Projections and Valuation Dynamics

NextEra's aggressive expansion into AI-linked energy projects has sparked mixed reactions from investors. While the company projects $35.9 billion in revenue and $9.4 billion in earnings by 2028, translating to a fair value estimate of $91.14 per share (a 14% upside from current levels), some analysts remain cautious. The stock dipped 2.6% following the Google partnership announcement, reflecting concerns about execution risks and the ability to convert these projects into near-term earnings.

Valuation models further highlight the complexity. A Dividend Discount Model (DDM) suggests NextEra may be overvalued by 18%, with an intrinsic value of $68.92 compared to its $81 price tag. Conversely, its Price-to-Earnings (PE) ratio of 26x is below the sector's fair ratio of 29.7x, indicating potential undervaluation for long-term investors. Analysts like UBS and TD Cowen have upgraded their price targets to $96 and $84, respectively, citing confidence in NextEra's ability to meet its 8%+ adjusted EPS growth targets through 2035.

Strategic Risks and Opportunities

The success of NextEra's AI-energy strategy hinges on several factors. First, the restart of the Duane Arnold plant faces permitting and regulatory hurdles, with delays potentially impacting revenue timelines. Second, the company's reliance on tech partners like Google and Meta exposes it to shifts in the hyperscalers' capital allocation priorities. However, the growing demand for clean energy from data centers-projected to account for 3% of global electricity use by 2030-provides a strong tailwind.

Moreover, NextEra's partnerships are not isolated. Meta's recent deals with Vistra Corp., Oklo, and TerraPower signal a broader industry trend of tech firms securing nuclear power for their infrastructure. This ecosystem of collaboration could solidify NextEra's position as a preferred partner, given its track record in large-scale project execution and grid modernization.

Conclusion: A Pivotal Player in the AI Energy Transition

NextEra Energy's strategic alignment with the AI-driven economy positions it as a key beneficiary of the energy transition. By restarting nuclear assets and co-developing AI infrastructure, the company is not only addressing the immediate power needs of hyperscalers but also future-proofing its business model against decarbonization mandates and grid constraints. While valuation debates persist, the combination of long-term revenue visibility, sector tailwinds, and institutional investor support suggests that NextEra's stock could outperform in the medium to long term-provided it navigates execution risks effectively.

For investors, the question is no longer whether NextEra is relevant to the AI era, but how quickly it can scale its partnerships into earnings.