This ‘Strong Buy’ Nuclear Energy Stock Is Heating Up on Trump’s Stargate Plans

Utility giant Vistra (VST) operates an integrated retail electricity and power generation business in 20 states. With a market capitalization of $65.29 billion, Vistra has approximately 40,000 megawatts of generation capacity from natural gas (NGH25), nuclear, coal, solar, and battery storage facilities. 

It serves more than 4 million customers through six segments. Notably, several nuclear energy providers have secured major contracts with tech companies and government agencies seeking reliable power sources for expanding operations.

Vistra and Constellation Energy (CEG) shares gained this week after President Donald Trump announced a $500 billion private-sector investment to build the required infrastructure for artificial intelligence. The big-ticket project, called Stargate, includes companies such as OpenAI, Softbank (SFTBY), and Oracle (ORCL), which will build data centers and other infrastructure in the U.S. 

Let’s see if Vistra Energy remains a top investment in 2025, after it more than tripled in 2024. 

Is Vistra Energy a Good Stock to Own?

Vistra Energy is transforming itself from a utility company into a key AI infrastructure player. In 2024, as nuclear power became essential for AI infrastructure, it emerged as a standout performer. Vistra strategically expanded its nuclear portfolio by acquiring Energy Harbor, allowing it to increase capacity from 2,400 MW to 6,400 MW. 

Several Big Tech giants are turning to nuclear energy to power data centers. For instance, Microsoft (MSFT) partnered with Constellation Energy, Google (GOOG) (GOOGL) contracted Kairos Power’s small modular reactors, and Amazon (AMZN) invested $650 million in Talen Energy’s (TLN) facilities. Nuclear power has gained prominence as a reliable, carbon-free energy source, as renewable alternatives face challenges with costs and supply chains. 

In the third quarter of 2024, Vistra reported net income of $1.84 billion and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.44 billion. Notably, it secured significant clean energy agreements, including solar projects with Amazon and Microsoft totaling over 600 MW. Vistra stated it plans to acquire the remaining 15% minority stake in Vistra Vision for $3.1 billion and gain complete ownership of nuclear, solar, and energy storage assets. 

In the last three years, Vistra has allocated $4.58 billion to share buybacks, reducing the outstanding share count by 30%. The company expects to repurchase shares worth $2.2 billion through 2026, which should drive earnings growth in the near term.

What Is the Target Price for VST Stock?

Shares of Vistra Energy went public in 2017 and have since returned 1,520% to shareholders after adjusting for dividend reinvestments. A key driver of a company’s share price is its ability to consistently increase revenue and earnings. In the last five years, Vistra Energy has increased revenue by 7.2% annually, while earnings growth is much higher at 38.3%. 

Analysts tracking Vistra Energy expect adjusted earnings per share to expand from $2.96 in 2023 to $8.26 in 2025. So, priced at 23x forward earnings, VST stock is reasonably valued given its strong earnings growth estimates.

Moreover, the company is forecast to invest close to $2 billion in capital expenditures in 2025, which should drive future earnings, dividends, and cash flow higher. Today, Vistra Energy pays shareholders an annual dividend of $0.89 per share, indicating a forward yield of 0.5%. These payouts have risen from $0.50 per share in August 2019. 

Out of the 12 analysts covering VST stock, 11 recommend “Strong Buy” and one recommends “Moderate Buy.” The average target price for the utility stock is $184.92, lower than the current trading price above $190.