Talen Energy (TLN) is betting big on AI, and Wall Street is loving it.
Last week, the Houston-based utility announced it’s acquiring two major natural gas power plants to boost its ability to meet rising demand from AI data centers.
The $3.8 billion gross deal includes Pennsylvania’s Moxie Freedom Energy Center and Ohio’s Guernsey Power Station, both modern, high-efficiency plants built with data-era power loads in mind.
After adjusting for tax benefits, the net price tag comes in at $3.5 billion and the returns could be massive.
Talen expects the acquisition to lift free cash flow per share by more than 40% starting in 2026, and over 50% through 2029.
CEO Mac McFarland called it a strategic win, adding that the company is “an innovator in data center contracting” and these additions will make Talen even more competitive in key markets.
Jefferies analysts raised their price target to $380 from $326, calling the deal “highly accretive & strategic.” Meanwhile, the stock jumped 20% last week to a record high of $328.
Talen said the new facilities will allow it to offer “reliable, scalable, grid-supported and regionally diverse low-carbon capacity” to hyperscale data centers.
This is the kind of date centers Amazon and other AI giants are building across the country.
It also emphasized that the deal improves operational flexibility and supports 24/7 clean energy delivery in high-demand regions, which is critical as AI workloads grow more power-intensive by the year.
TLN stock is now up 63.1% year-to-date and 172.7% over the past 12 months.
Amazon supercharges its Talen ties
The momentum doesn’t stop there.
In June, Talen expanded its nuclear energy partnership with Amazon Web Services, extending a power purchase agreement (PPA) that will provide 1,920 megawatts of carbon-free energy to AWS data centers from Talen’s Susquehanna nuclear plant in Pennsylvania.
The deal runs through 2042, with options to extend it even longer. Full delivery is expected no later than 2032, though both companies hinted they may accelerate that timeline.
Talen said the expanded Amazon deal will “significantly decrease” future market risk while reducing reliance on the federal nuclear production tax credit.
There’s also potential for more. Talen and Amazon said they will explore building small modular reactors (SMRs) in the region and expanding Susquehanna’s output.
With tech giants scrambling for clean, steady energy to fuel AI infrastructure, Talen’s nuclear-gas combo looks like a rare power play.
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