The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. The company also develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, gas distribution operations, and gas pipeline investments operations. In addition, it owns and operates nuclear, coal, hydro, cogeneration, solar, wind, battery storage, and fuel cell facilities. Further, the constructs, operates, and maintains approximately 77,900 miles of natural gas pipelines and 14 storage facilities with total capacity of 157 Bcf to provide natural gas to residential, commercial, and industrial customers. The company serves approximately 8.9 million electric and gas utility customers. Further, it develops distributed energy and resilience solutions; deploys microgrids for commercial, industrial, governmental, and utility customers; and offers digital wireless communications and fiber optics services. The Southern Company was incorporated in 1945 and is headquartered in Atlanta, Georgia.

Southern Company looks like a high-quality but not cheap defensive asset: its operating margin and profitability are noticeably above the industry median, yet the valuation already reflects this advantage. P/E, P/S, and P/B are above industry benchmarks, indicating a premium for stability and reducing the potential for further upside without faster growth. At the same time, P/FCF looks anomalously low, but in the utility sector such a metric is often distorted by capital intensity and should not be interpreted as a clear signal of undervaluation. Net profit margin, operating margin, and gross margin remain at strong levels and generally look stable over the years, although the peak in efficiency has likely already passed. ROE and return on tangible equity are also above the median, confirming the company’s ability to generate returns on capital better than the industry average. On the other hand, liquidity is weak: the current ratio and quick ratio are below comfortable levels, which is typical for a utility but still limits financial flexibility. Debt burden remains high, as debt/equity and long-term debt are significantly above what one would prefer in a more conservative assessment. Growth in assets, revenue, EBITDA, and earnings supports the fundamental picture, but the dynamics are not strong enough to justify a meaningful increase in the target price. Dividend yield of around 0.8% looks modest for a utility company and does not provide a strong additional argument for a re-rating. Overall, this is a “high quality, stable, but expensive” profile: fundamentals support the current valuation, but premium multiples and leverage limit the potential for multiple expansion. Therefore, it makes sense to slightly lower the target forecast while maintaining a cautious view of the stock as a defensive but no longer clearly undervalued story.

Southern Company (The)

Средний индекс, значительно упал. Быки в растерянности.

Medium index, significantly down. The bulls are confused.

Средний индекс, незначительно упал. Рынок не поддерживает быков.

Medium index, slightly down. The market does not support the bulls.

Слабый индекс, незначительно вырос. Отток средств из лонгов остается значительным.

Weak index, slightly up. The outflow of funds from longs remains significant.

Strong margins and SO profitability support the valuation, but premium multiples, high debt, and weak liquidity limit upside.

NextEra Energy NEE currently trades at a forward 12-month price-to-earnings (P/E) multiple of 19.39X, which is above the Zacks Utility Electric - Power industry average of 14.76X and the broader Utilities sector’s 15.29X.
This premium valuation is likely due to the strong operational performance and growing customer base, both of which continue to support increasing demand for its services.
Other utilities, Duke Energy Corporation DUK and The Southern Company SO, also have strong capacity to generate clean electricity. Duke Energy and Southern Company are currently trading at P/E12M of 17X and 18.23X, respectively. Both utilities are trading at a discount compared with NextEra Energy.
Shares of NextEra Energy have gained 15.1% in the past year compared with the industry’s rise of 8.7%.
Is NextEra Energy's current premium justified given rising power demand in its service territories and a rising backlog of renewable generation? Let’s delve deeper and find out the factors that can help investors decide whether it is a good entry point to add this stock to their portfolio.
Factors Behind NextEra Energy Stock’s Consistent Performance?
Florida’s economic growth is supporting higher electricity demand and customer additions for NextEra Energy. Its subsidiary, Florida Power & Light, benefits from competitive residential rates and continued infrastructure investments, supporting customer growth.
NextEra Energy Resources is expanding its renewable portfolio, targeting 76.6-107.6 GW of new renewable capacity during 2026-2032. A development backlog exceeding 33 GW provides strong visibility into growth. Data centers represent a strong long-term growth opportunity. NextEra Energy Resources is evaluating 30 potential hubs, targeting 40 by year-end 2026 with 15 GW of new generation planned by 2035 and upside potential exceeding 30 GW.
The company is also diversifying through acquisitions and asset rotation. The Symmetry acquisition expanded its natural gas capabilities for commercial and industrial customers, while Caliber added non-operating shale energy interests.
Strategic partnerships are strengthening NextEra Energy's growth outlook. Agreements with Google Cloud and Meta are expanding demand for the company's wind, solar and battery storage projects while adding long-duration contracted revenues. These PPAs enhance earnings visibility, reduce exposure to power price volatility and diversify the customer base through high-quality counterparties.
NextEra Energy’s Earnings Estimates Moving North
The Zacks Consensus Estimate for NEE’s 2026 and 2027 earnings per share indicates a year-over-year increase of 8.09% and 8.60%, respectively.
The same for DUK’s 2026 and 2027 earnings per share indicates a year-over-year increase of 6.5% and 6.43%, respectively.
NEE Stock Returns Better Than Its Industry
Return on equity (“ROE”) is a financial ratio that measures how well a company uses its shareholders’ equity to generate profits. The current ROE of the company indicates that it is using shareholders’ funds more efficiently than peers.
NextEra Energy’s trailing 12-month ROE is 12.28%, ahead of the industry average of 11.4%.
Southern Company’s trailing 12-month ROE is 12.93%, also better than its industry peers.
NextEra Energy’s Capital Return Program
NextEra Energy expects to increase the dividend rate by nearly 10% annually through at least 2026 and grow 6% per year from year-end 2026 through 2028, subject to the approval of its board of directors. NEE’s current quarterly dividend rate is 62.32 cents per share. The dividend yield of 3.02% is better than the S&P 500 composite’s yield of 1.42%.
NEE’s Net Margin
Net margin measures the percentage of revenue retained as profit after deducting all expenses, taxes and interest. NEE’s net margin is currently pegged at 28.44% compared with the industry’s 15.81%.
Wrapping Up
NextEra Energy continues to deliver steady performance, supported by growing demand for clean energy. The company is expanding its clean energy portfolio, while Florida’s strong economic growth provides additional opportunities for sustained utility expansion.
Positive earnings estimate revisions and solid return on equity support maintaining positions in this Zacks Rank #3 (Hold) stock. However, NEE’s premium valuation suggests new investors may consider waiting for a more attractive entry point.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).

NEE Stock Trades at a Premium Valuation: Buy, Hold or Stay Away?

Key Points
To brace against market pullbacks, add some defensive stocks or funds to your mix.
Defensive industries include healthcare, utilities, and consumer staples.
Dividend payers can be great to hold in market downturns, too.
Is a stock market crash imminent? Well, no one knows for sure, but roughly 38% of investors surveyed by the American Association of Individual Investors reported expecting the stock market to decline over the coming six months (as of early September). Another worrisome sign is the S&P 500's historically high valuation. The cyclically adjusted price-to-earnings (CAPE) ratio was recently at 41.4, far higher than its long-term average of 17.4 and close to an all-time high of 44 reached in 1999 before the dot-com bubble turned into a crash.
It's generally not smart to jump out of the market fearing a crash -- because that's market timing -- and your timing may well be off. Instead, to calm your jitters, you might just invest in some exchange-traded funds (ETFs) that are built to withstand bear markets better than average investments.
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A market crash or correction will happen one of these days. Here are some ETFs to consider, to brace against that. Each is focused on a "defensive" part of the economy -- on businesses that consumers will generally keep buying from, no matter how the economy is doing.
Vanguard Health Care Index Fund ETF
The Vanguard Health Care Index Fund ETF (NYSEMKT: VHT) is a prime example. In a recession, people will still need healthcare -- they will still buy their medications (to the degree that they're able to) and will still visit doctors. This fund recently held 417 stocks, with top holdings including Eli Lilly, Johnson & Johnson, and UnitedHealth Group. Its annual fee is just 0.09%, costing you $9 annually for every $10,000 you have invested in the fund, and its dividend yield was recently 1.5%.
State Street Utilities Select Sector SPDR ETF
The State Street Utilities Select Sector SPDR ETF (NYSEMKT: XLU) also has a low annual fee -- just 0.08% -- and its dividend yield was recently 2.8%. It's focused on utility-related companies, such as NextEra Energy, Southern Co., and Duke Energy, and it recently held about 31 of them. When the economy flags, people and businesses will still need to keep the lights on.
Vanguard Consumer Staples Index Fund ETF Shares
The Vanguard Consumer Staples Index Fund ETF Shares (NYSEMKT: VDC) specializes in consumer staples companies, recently holding 103 of them, such as Walmart, Procter & Gamble, and Coca-Cola. Its annual fee is 0.09%, and its recent dividend yield 2.1%. Clearly, no matter whether the economy is up or down, gobs of people will want to keep buying shampoo, soda, and items from Walmart.
Schwab U.S. REIT ETF
The Schwab U.S. REIT ETF (NYSEMKT: SCHH) is another defensive ETF, in that it holds many real estate investment trusts (REITs) -- companies that buy properties and lease them out. These are typically multiyear leases, if not multidecade, so that income is likely to keep rolling to the REITS. The ETF's annual fee is just 0.07%, and its recent dividend yield 2.8%. Its recent 117 holdings included Prologis, American Tower, and Realty Income.
Schwab U.S. Dividend Equity ETF
A solid dividend-focused ETF such as the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) is also worth considering. (There are other good dividend ETFs, too, of course.) Why? Because dividend-paying companies tend to be established and profitable, with relatively dependable income. So they're more solid than the average stock. This ETF has an ultra-low annual fee of 0.06% and a recent dividend yield of 3%. Its top holdings (out of 98) recently included Merck, Chevron, and Verizon Communications.
Dividend income is particularly nice during recessions because while some stocks may be stagnating, healthy dividend payers will keep delivering cash to shareholders.
Whether the stock market pulls back this year, next year, or the year after, these ETFs will likely keep growing -- and delivering a little income regularly, too. Take a closer look at any of these funds that intrigue you.
Should you buy stock in Vanguard World Fund - Vanguard Health Care ETF right now?
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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $410,024!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,372,815!*
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Selena Maranjian has positions in American Tower, NextEra Energy, Procter & Gamble, Realty Income, Schwab U.S. Dividend Equity ETF, and Verizon Communications. The Motley Fool has positions in and recommends American Tower, Chevron, Eli Lilly, Merck, NextEra Energy, Prologis, Realty Income, and Walmart. The Motley Fool recommends Duke Energy, Johnson & Johnson, UnitedHealth Group, and Verizon Communications. The Motley Fool has a disclosure policy.

These 5 ETFs Are Built for Bear Markets. History Says Now Is a Fantastic Time to Buy.

Key Points
Warren Buffett guided the Berkshire Hathaway holding company to market-beating returns for 60 years.
He regularly said that everyday investors could do well by purchasing an exchange-traded fund that tracks a diversified index like the S&P 500.
In February 2014, Buffett specifically recommended the Vanguard S&P 500 ETF for its low fees and its ability to help young investors secure their financial future.
Warren Buffett is one of the world's most iconic investors. He served as CEO of the Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) holding company from 1965 to 2025, turning it into a $1 trillion conglomerate with numerous subsidiaries, a stock portfolio worth over $350 billion, and another $365 billion in cash.
Berkshire stock returned 19.7% annually during Buffett's 60-year tenure, so an investment of $500 in 1965 would have grown to a whopping $24 million by the end of 2025. But he was a seasoned professional, so he always knew the average investor would struggle to replicate his performance. That's why he consistently advocated exchange-traded funds (ETFs) that track a diversified index, like the S&P 500.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
The Vanguard S&P 500 ETF (NYSEMKT: VOO) is one that Buffett specifically recommended in 2014 for its ultra-low fees. Here's how it could help young investors in their 20s build a financially secure future.
America's best stocks from 11 economic sectors
The S&P 500 is the most widely followed U.S. stock market index for a couple of reasons. First, it's made up of 500 companies from 11 different sectors of the economy, so it's highly diversified. Second, it has very strict entry criteria: its members must maintain a market capitalization of at least $22.7 billion and be profitable. But even after those boxes are ticked, a special committee ultimately decides which companies make the cut.
The S&P is weighted by market capitalization, so the largest companies in the index have a much higher representation than the smallest. Therefore, despite its diversified composition, the information technology sector has a massive weighting of 36.6% because it's home to five companies worth $1 trillion or more (Nvidia, Apple, Microsoft, Broadcom, and Micron Technology).
Below are the 11 sectors that make up the Vanguard S&P 500 ETF, along with their weightings and the three largest companies in each.
S&P 500 Sector
Sector Weighting
Largest Companies
Information technology
36.6%
Nvidia, Apple, Microsoft
Financials
12.5%
Berkshire Hathaway, JPMorgan Chase, Visa
Communication services
9.9%
Alphabet, Meta Platforms, Netflix
Consumer discretionary
9.4%
Amazon, Tesla, Home Depot
Healthcare
9.1%
Eli Lilly, Johnson & Johnson, AbbVie
Industrials
8.7%
Caterpillar, GE Aerospace, RTX Corporation
Consumer staples
4.7%
Walmart, Costco, Coca-Cola
Energy
3.4%
ExxonMobil, Chevron, ConocoPhillips
Utilities
2.1%
NextEra Energy, Constellation Energy, Southern Co
Real estate
1.9%
Welltower, Prologis, Equinix
Materials
1.8%
Linde, Newmont, Freeport-McMoRan
Data source: Vanguard. Sector weightings are accurate as of July 31, 2026, and are subject to change.
The technology sector is exerting a particularly strong influence on the performance of the S&P 500 right now, thanks to the artificial intelligence (AI) revolution, which began to gain momentum when OpenAI's ChatGPT application surpassed 100 million users in early 2023. In fact, if we exclude the sector's contribution over the last three-and-a-half years, the S&P 500's return drops from 101% to just 63%.
Simply put, the Vanguard ETF gives investors exposure to the fastest-growing area of the market in a diversified manner, which is why it's a popular long-term investment option.
Taking Buffett's advice could yield spectacular results
The S&P 500 has returned 10.7% since its inception in 1957 (assuming all dividends were reinvested). But it has delivered an accelerated return of 13.9% since Buffett recommended the Vanguard S&P 500 ETF in 2014, primarily thanks to the tech sector.
Past performance isn't always a reliable indicator of future results, but a 25-year-old investor could build a very nice retirement fund using the Vanguard ETF if its historical returns persist. Below are two potential outcomes.
Starting Balance at Age 25
Compound Annual Return
Balance at Age 65
$20,000
10.7%
$1,166,634
$20,000
13.9%
$3,647,362
Those results don't include costs, but with an expense ratio of just 0.03%, investors would incur an annual fee of just $3 for every $10,000 they have parked in the Vanguard ETF.
To conclude, investors probably shouldn't sell their entire position at retirement age, because compounding yields the greatest benefits over time. With a large enough balance after 40 years, the subsequent annual returns could provide a significant income to fund life after employment.
Should you buy stock in Vanguard S&P 500 ETF right now?
Before you buy stock in Vanguard S&P 500 ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
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JPMorgan Chase is an advertising partner of Motley Fool Money. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Alphabet, Amazon, Apple, Berkshire Hathaway, Broadcom, Caterpillar, Chevron, Constellation Energy, Costco Wholesale, Eli Lilly, Equinix, GE Aerospace, Home Depot, JPMorgan Chase, Meta Platforms, Micron Technology, Microsoft, Netflix, NextEra Energy, Nvidia, Prologis, RTX, Tesla, Vanguard S&P 500 ETF, Visa, and Walmart. The Motley Fool recommends ConocoPhillips, Johnson & Johnson, and Linde. The Motley Fool has a disclosure policy.

If I Were in My 20s, I'd Buy This Vanguard ETF Warren Buffett Recommended and Hold It Forever

Legendary investor Warren Buffett advises to be fearful when others are greedy, and be greedy when others are fearful. One way we can try to measure the level of fear in a given stock is through a technical analysis indicator called the Relative Strength Index, or RSI, which measures momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.
In trading on Friday, shares of Southern Company (Symbol: SO) entered into oversold territory, hitting an RSI reading of 29.7, after changing hands as low as $87.76 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 56.3. A bullish investor could look at SO's 29.7 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. The chart below shows the one year performance of SO shares:
Looking at the chart above, SO's low point in its 52 week range is $83.80 per share, with $100.835 as the 52 week high point — that compares with a last trade of $88.11.
Further SO Research:

Oversold Conditions For Southern (SO)

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the State Street Utilities Select Sector SPDR ETF (Symbol: XLU) where we have detected an approximate $187.7 million dollar inflow -- that's a 0.9% increase week over week in outstanding units (from 514,248,320 to 518,648,320). Among the largest underlying components of XLU, in trading today Southern Company (Symbol: SO) is up about 0.4%, Duke Energy Corp (Symbol: DUK) is up about 0.5%, and American Electric Power Co Inc (Symbol: AEP) is up by about 0.4%. For a complete list of holdings, visit the XLU Holdings page » The chart below shows the one year price performance of XLU, versus its 200 day moving average:
Looking at the chart above, XLU's low point in its 52 week range is $41.15 per share, with $47.80 as the 52 week high point — that compares with a last trade of $42.86. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Further XLU Research:

Notable ETF Inflow Detected - XLU, SO, DUK, AEP

Key Points
VPU gives investors a diversified basket of U.S. utilities.
That basket could be well insulated against the next market downturn.
Vanguard's S&P 500 ETF (NYSEMKT: VOO), which passively tracks the S&P 500 (SNPINDEX: ^GSPC), is considered a reliable long-term investment. However, even though the S&P 500 has generated an average annual total return of about 10% since its inception, the benchmark index also typically suffers steep, double-digit declines during recessions.
Therefore, if you're worried about a stock market correction, it might be smarter to invest in Vanguard's Utilities ETF (NYSEMKT: VPU) instead of the top S&P 500 ETF. Let's see how VPU usually protects long-term investors -- and why it might be worth nibbling on today.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
What does VPU own?
VPU passively tracks the MSCI U.S. Investable Market Index (IMI) Utilities 25/50, which tracks the U.S. utilities sector through small-cap, mid-cap, and large-cap companies. It manages $10.8 billion in assets, making it the second-largest U.S. utilities ETF after State Street's Utilities Select Sector SPDR Fund (NYSEMKT: XLU), which manages $22 billion.
But unlike XLU, which holds only the largest utility stocks in the S&P 500, VPU tracks a broader range of companies using a "25/50" diversification rule. First, no single company's market cap can exceed 25% of VPU's total market cap. Second, the combined weight of all companies that individually exceed 5% of VPU's index cannot exceed 50% of the entire fund.
VPU currently holds 68 stocks with a median market cap of $4.8 billion. Electric utilities account for 61.8% of its portfolio, multi-utilities account for 24.6%, and the rest is split between gas, independent power, water, and renewable electricity providers. Its top holdings include NextEra Energy (11.78% of its portfolio), The Southern Company (6.92%), Duke Energy (6.34%), and Constellation Energy (5.26%).
Why is VPU a safe ETF to own?
Utilities tend to underperform the S&P 500 in bull markets, when investors are rushing toward higher-growth stocks. But they also usually outperform the S&P 500 in bear markets, when the macro headwinds drive investors back toward safer, income-generating investments.
Utilities are well insulated from macro headwinds, since their customers won't cut them off just to save a few dollars. Many utilities have also benefited from the breakneck expansion of the power-hungry cloud infrastructure and AI markets over the past few years.
Back in 2022, the S&P 500 experienced a peak-to-trough decline of 25% as the Fed raised its benchmark rates. But during that same period, VPU delivered a total return of 1%. So if you're looking for a safe place to park your cash in this choppy market -- while earning a decent 30-day SEC yield of 2.71% -- VPU checks all the right boxes.
Should you buy stock in Vanguard S&P 500 ETF right now?
Before you buy stock in Vanguard S&P 500 ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $440,710!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Constellation Energy, NextEra Energy, and Vanguard S&P 500 ETF. The Motley Fool recommends Duke Energy. The Motley Fool has a disclosure policy.

If a Stock Market Correction Is Coming, History Says This ETF Has Always Protected Long-Term Investors

Southern Company’s SO largest electric subsidiary, Georgia Power, has received regulatory approval for a major electricity supply agreement with OpenAI, highlighting the growing investment opportunity created by the rapid expansion of artificial intelligence (AI) and data center infrastructure.
The agreement covers OpenAI’s planned project in Effingham County, Georgia, and could add approximately 3,200 megawatts (“MW”) of new electricity demand to Georgia Power’s system. The deal is significant not only because of its size, but also because it shows how utilities could benefit from the accelerating power needs of the AI economy.
A 3.2-GW Customer Is a Major Addition
A 3.2-GW electricity load is substantial. It is comparable to the output of several large conventional power plants and represents a meaningful increase in demand for Georgia Power.
The agreement comes as electricity consumption in the United States is entering a period of renewed growth. After years of relatively modest demand increases, utilities are now preparing for rapidly expanding requirements from AI, cloud computing, semiconductor manufacturing, industrial reshoring and population growth.
Georgia is emerging as an important destination for hyperscale data centers and AI infrastructure. For Southern Company, this creates an opportunity to expand its customer base and potentially generate higher revenues as large technology companies require increasingly large amounts of electricity.
Importantly, OpenAI has agreed to make up to 1,000 MW of its electricity demand flexible. This means Georgia Power could reduce power deliveries to the facility during periods of exceptionally high system demand.
That flexibility could help the utility manage peak loads without building generation capacity solely for the data center. From an investor perspective, this is an important feature because it could help balance growth in electricity demand with the cost of maintaining system reliability.
Protecting Existing Customers
One of the biggest questions surrounding the data center boom is who ultimately pays for the massive infrastructure required to serve these facilities.
Utilities may need to invest in generation, transmission and distribution infrastructure to accommodate new large-load customers. If those costs are spread across the broader customer base, residential and smaller commercial customers could potentially face higher rates.
Georgia Power’s agreement with OpenAI takes a different approach. According to the SO’s Unit press release, OpenAI will cover the full cost of infrastructure specifically required to serve its project. That arrangement could help reduce the risk that existing customers are forced to subsidize the infrastructure associated with rapidly expanding data center demand.
SO’s Unit and regulators have also established a framework for large-load customers designed to protect existing customers from costs associated with new data centers and other major industrial users. For Southern Company investors, this regulatory structure could become increasingly important as the utility pursues additional large-load opportunities.
Potential Customer Savings Add Another Positive
Perhaps the most notable aspect of the announcement is the projected benefit to Georgia Power customers.
The utility expects revenues from OpenAI and other previously announced large-load customers, combined with additional projected growth, to generate approximately $950 million in annual customer savings beginning in 2029. Over the 2029–2031 period, Georgia Power projects total customer benefits of approximately $2.847 billion. For a typical residential customer using 1,000 kilowatt-hours per month, the projected benefit is now expected to reach at least $15 per month, or $180 annually, starting in 2029. That represents an increase from the previously announced commitment of $102 per year in December 2025.
For investors, these figures suggest that large-load growth does not necessarily have to translate into higher costs for existing customers. If structured effectively, attracting major electricity users could help spread fixed system costs across a larger revenue base while allowing the utility to invest in infrastructure that supports long-term growth.
Why This Matters for Southern Company
Georgia Power serves approximately 2.8 million customers and is Southern Company’s principal electric utility subsidiary. The OpenAI agreement therefore represents more than a single customer contract—it is a potential indicator of the changing economics of the utility industry.
Southern Company already operates in a region benefiting from population growth, manufacturing investment and rising electricity consumption. The addition of AI and hyperscale data centers could further strengthen the company’s long-term demand outlook.
The company’s ability to secure large customers while requiring them to shoulder project-specific infrastructure costs could also offer an attractive model for managing the financial risks associated with the data center boom.
The agreement follows a July 2025 freeze on Georgia Power base rates and a separate plan approved in May 2026 to reduce overall rates, adding another layer to the utility’s evolving regulatory and financial outlook.
The Bottom Line for SO Investors
The OpenAI deal reinforces a broader investment thesis for Southern Company: electricity demand is becoming an increasingly valuable growth driver. The key issue for investors will be whether SO can convert surging AI and data center demand into sustainable earnings and cash-flow growth while controlling capital expenditures and protecting existing customers from unnecessary costs.
Georgia Power’s agreement with OpenAI provides several encouraging signals. The 3.2-GW load creates substantial potential demand, the flexible-load commitment could improve grid management, and OpenAI’s responsibility for project-specific infrastructure helps limit the financial burden on existing customers.
As AI development accelerates, electricity may become one of the most important physical inputs supporting the technology boom. Utilities capable of supplying that power efficiently—and under favorable regulatory structures—could become some of the unexpected beneficiaries of the AI investment cycle. For Southern, Georgia Power’s OpenAI agreement could be an important early example of that opportunity.
SO’s Zacks Rank and Key Picks
Currently, SO carries a Zacks Rank #3 (Hold).
Investors interested in the utility sector might look at some better-ranked stocks like CLP CLPHY, Exelon EXC and RWE AG RWEOY, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CLP is worth approximately $25.62 billion. CLP is a Hong Kong-based Asia-Pacific power company involved across the electricity value chain, including generation, transmission, distribution and retail, with a growing focus on renewable energy and storage.
Exelon is worth approximately $45.87 billion. Exelon is a U.S. regulated utility holding company that operates six transmission and distribution utilities serving nearly 11 million customers across several major U.S. markets.
RWE AG is worth approximately $48.69 billion. RWE is a Germany-based international power producer focused on renewable energy, including offshore wind, while also operating flexible conventional generation, storage and energy-trading businesses.
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Southern's Unit Wins Regulatory Approval for OpenAI Power Deal

(RTTNews) - Georgia Power, a subsidiary of Southern Co. (SO), on Wednesday announced that its contract to serve OpenAI's new project in Effingham County has received approval from the Georgia Public Service Commission.
The agreement includes 3,200 MW of new demand, with OpenAI covering the full infrastructure costs and committing up to 1,000 MW of flexible demand response.
The company said the approval is part of Georgia Power's broader large-load growth strategy.
The strategy is expected to generate approximately $950 million in annual customer savings beginning in 2029.
The company also said that typical residential customers using 1,000 kilowatt-hours per month are expected to save at least $15 per month starting in 2029.
That translates to annual savings of $180, up from the company's previous estimate of $102 annually.
The projected savings are expected to total $2.847 billion over 2029-2031.
The agreement also follows the company's previously approved base-rate freeze and broader rate reduction plan.
Southern Co. closed trading 0.23% lesser at $89.76 on the New York Stock Exchange. In the overnight, the stock traded 0.48% higher at $90.19.

Georgia Power's OpenAI Contract Approved

Constellation Energy Corporation’s CEG shares have gained 3.1% over the past month against the Zacks Alternative Energy – Other industry’s decline of 2.7%. CEG is steadily expanding the supply of clean energy to the grid through the efficient operation of its nuclear fleet, while also benefiting from government support aimed at boosting large-scale clean energy generation.
Constellation Energy continues to benefit from rising power demand, high-quality nuclear assets, long-term contracting, Calpine integration, pricing support and disciplined capital allocation, which underpin future earnings growth. The company is exposed to power-market cyclicality, regulatory uncertainty, nuclear operating risks, elevated capital requirements and Calpine-related leverage.
Price Performance (One Month)
Other companies like Duke Energy Corporation DUK and The Southern Company SO have declined 5.7% and 6.7%, respectively, during the same period.
Duke Energy is also actively pursuing nuclear energy expansion as part of its long-term clean energy strategy, particularly in the Carolinas. Southern Company is another major U.S. electric utility serving the fast-growing Southeast, benefiting from rising electricity demand, regulated investments and a diversified generation portfolio.
Given the current gain in prices, should you consider adding Constellation Energy to your portfolio? Let’s examine the key factors and assess their investment prospects.
Key Factors Powering CEG Stock’s Performance
Constellation Energy is benefiting from rising clean-energy demand through the diversified generation portfolio, led by its extensive nuclear fleet. Its nuclear assets achieved a 93% capacity factor in the second quarter of 2026, underscoring strong reliability and zero-carbon generation capabilities.
The company is also securing long-term clean-energy agreements with major customers. Constellation Energy’s 15-year nuclear power agreement with Walmart will supply nearly 176 MW from the Dresden Clean Energy Center beginning in 2029 and 2030, supporting planned uprates, grid reliability and its long-term growth strategy.
Its capital plan remains focused on sustaining fleet reliability and funding projects that extend asset lives or add output. The company expects capital expenditures of about $5.7 billion in 2026 and $4.7 billion in 2027. Spending includes nuclear fuel inventory, uprates, license renewals and plant upgrades.
The Calpine acquisition, completed in January 2026, expanded Constellation Energy’s generation portfolio with natural gas, oil, geothermal, battery storage and solar assets. The deal also strengthened Constellation Energy’s competitive retail business, increasing its nationwide customer base to approximately 2.5 million accounts. Calpine’s contribution to second-quarter 2026 adjusted operating earnings demonstrates that the acquisition is already supporting Constellation Energy’s financial performance and is likely to contribute to its performance over the long term.
Risks to Constellation Energy’s Growth
Constellation Energy faces operational and regulatory risks tied to its large nuclear fleet, including unplanned outages, maintenance needs, fuel-supply constraints and potential policy changes. The company’s earnings are also influenced by weather conditions, fluctuations in wholesale power and fuel markets, and the growing adoption of customer-owned energy solutions that may temper long-term demand growth.
The Calpine acquisition has also increased debt levels and integration challenges. Moreover, uncertainty over nuclear tax credits and changing wholesale power market conditions could pressure profitability and overall financial performance.
Constellation Energy’s Earnings Estimates Moving North
The Zacks Consensus Estimate for Constellation Energy’s 2026 and 2027 earnings per share indicates a year-over-year increase of 28.01% and 7.96%, respectively.
The same for Duke Energy’s 2026 and 2027 earnings per share indicates a year-over-year increase of 6.50% and 6.49%, respectively. The Zacks Consensus Estimate for Southern Company’s 2026 and 2027 earnings per share indicates a year-over-year increase of 6.74% and 7.16%, respectively.
CEG’s Debt Usage Is Lower Than Industry Peers
The total debt-to-capital of Constellation Energy is 43.32% compared with its industry’s 54.07%. The ratio indicates CEG is utilizing much lower debt compared with its peers to run operations. The declining interest rate will be beneficial for the company, as it will further reduce long-term interest expenses.
CEG Stock Returns Higher Than the Industry
Return on equity (“ROE”) is a financial ratio that measures how well a company uses its shareholders’ equity to generate profits. The current ROE of the company indicates that it is using shareholders’ funds more efficiently than peers.
Constellation Energy’s trailing 12-month ROE of 14.89% is better than the industry average of 7.94%.
Image Source: Zacks Investment Research
Southern Company’s ROE is 12.93%, which is also better than its industry average.
CEG Stock Trading at a Discount
Constellation Energy is currently trading at a forward 12-month P/E basis (P/EF12 M) of 21.96X, a discount compared with its industry’s 23.94X on P/EF12 M.
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CEG’s Net Margin Lower Than Industry
Net margin measures the percentage of revenue retained as profit after deducting all expenses, taxes and interest. CEG’s net margin is currently pegged at 11.39% compared with the industry’s 14.4%.
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Wrapping Up
Constellation Energy is well-positioned to capitalize on rising clean-energy demand across its service territories. Supported by a robust generation portfolio, the company is equipped to meet growing energy needs in a reliable and efficient manner.
Constellation Energy’s rising estimates, strong ROE and lower debt usage make this Zacks Rank #3 (Hold) stock attractive. However, given CEG’s lower net margin compared with the industry, prospective investors may find it prudent to wait for a more attractive entry point.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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CEG Stock Outperforms Industry in the Past Month: Buy, Hold or Sell

GE Vernova Inc. GEV has entered into latter half of 2026 with a robust backlog that strengthens its revenue outlook. As electricity consumption continues to rise, growing demand for the company’s power-generation and grid technologies is translating into a stronger order pipeline and greater visibility into future business performance.
The company ended the second quarter of 2026 with a $176-billion backlog, up $13 billion sequentially, while orders increased 88% organically to $24.2 billion. Power and Electrification led the gains, reflecting accelerating demand for generation and grid infrastructure.
The strength of GE Vernova’s Power business is particularly notable. Gas equipment backlog and slot reservation agreements increased from 100 gigawatt (GW) to 116 GW, and management expects at least 125 GW by year-end. Electrification continues to benefit from grid investment and data-center demand, with data-center orders exceeding $5 billion year to date.
The company’s backlog expansion is already being accompanied by stronger financial results. GE Vernova generated $11.1 billion of revenues in the second quarter, up 22% year over year, while adjusted EBITDA increased 62% to $1.25 billion. Adjusted EBITDA margin expanded to 11.3% from 8.5% a year earlier. Free cash flow reached $5.1 billion in the quarter compared with just $194 million in the second quarter of 2025.
With electricity consumption, grid investment and generation requirements creating structural opportunities across its portfolio, the company’s growing backlog could remain one of its most important drivers of revenue and earnings growth over the next several years.
Companies Benefiting From the Trend
The broader industry is experiencing a similar investment cycle. U.S. utilities are increasing capital spending as data centers, industrial activity and electrification drive electricity demand.
Southern Company SO: The company is positioned to benefit from rising electricity demand in its service territories and continued investment in generation and grid infrastructure.
Entergy Corporation ETR: Its service territories include areas experiencing industrial and data-center-related load growth, creating opportunities for additional generation and grid investment.
Earnings Estimates for GEV
The Zacks Consensus Estimate for 2026 earnings per share (EPS) indicates an increase of 74.11% and that for 2027 EPS implies a decline of 21.2% year over year.
GEV Stock Trading at a Premium
GEV is trading at a premium relative to the industry, with a forward 12-month price-to-earnings of 39.79X compared with the industry average of 25.39X.
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GEV Stock’s Price Performance
In the past six months, the company’s shares have risen 30% against the industry’s 4.2% decline.
Image Source: Zacks Investment Research
GEV’s Zacks Rank
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
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This article originally published on Zacks Investment Research (zacks.com).

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