It’s Wednesday and the overall expectation going into tomorrow morning's opening bell is that we’ll hit new record highs… again. Will we? Only time will tell but it’s hard to go against a market that’s moving like it’s dancing to Freddy Mercury’s perfect rendition of  “Don’t Stop Me Now”. 

However, as we await the madness set to take place across the markets tomorrow…

In today’s issue, we have a non-profit roast event for Boeing CEO Dave Calhoun and a full breakdown on Big Tech’s #1 Energy stock you’ve (probably) never heard of…

As always, there’s a lot to digest this morning soooo…

Let’s get to it! 

Boeing CEO Dave Calhoun Gets a Senate Smackdown

In light of the continued market optimism this week, Boeing CEO Dave Calhoun has seen the exact opposite. Yesterday, Calhoun stepped boldly into a Senate hearing in hopes of a calm discussion about planes and safety… but instead, was greeted with a verbal smackdown that most likely made him wish he’d stayed in bed. Why? Well let’s break down this governmental grilling.

In short, Boeing’s been having a bad time lately. In January, a door plug blew out of one of their nearly new 737 Max planes midair. But if you think that’s bad enough for business, that’s just the tip of the iceberg. Enter Sam Mohawk, a Boeing employee turned whistleblower, who claimed the company lost track of damaged parts. These parts weren’t up to scratch, and Boeing allegedly tried to hide this mess from the FAA.

Now, if you’re thinking this sounds like a script for a disaster movie, you wouldn’t be far off. Mohawk even said his bosses told him to hide evidence. What did Boeing do in return? They slapped Mohawk with a warning for "unacceptable behavior." You know, because “integrity is so disruptive.”

Senate Smackdown: Calhoun in the Hot Seat

Calhoun’s Senate hearing kicked off with him apologizing to the families of those who died in the 737 Max crashes. Before you could say "accountability," he was hit with a barrage of accusations from senators. Senator Richard Blumenthal didn’t mince words, saying Boeing’s promises to improve were as solid as a sandcastle at high tide.

Senator Josh Hawley was even more direct, essentially asking Calhoun why he hadn’t resigned yet. Hawley also grilled Calhoun about his $32.8 million salary, questioning what exactly he was getting paid to do. Ouch.

The Whistleblower Wrecking Ball

What’s interesting is that the whistleblowers are the unsung heroes in this saga. Take Barnett, a 30-year Boeing veteran who raised alarms about missing parts. His supervisor responded with more phone calls than a telemarketer on Red Bull, pushing him to the brink. Calhoun claimed Boeing respects whistleblowers, but couldn’t provide specifics on how many people have been fired for retaliation. Sounds like a page out of the “How to Dodge a Question” playbook.

Calhoun’s Defense: We’re Working on It, Promise!

Calhoun tried to defend Boeing’s actions, saying they’re committed to improving safety and quality. He mentioned some employees were fired for retaliation, but conveniently left out names due to “privacy concerns.” He also pointed out that January’s door-plug blowout was a manufacturing defect, not a systemic issue. Sure, Dave, because one midair door blowout is totally fine.

FAA’s Hard Line and Production Problems

The FAA isn’t buying it. They’ve got inspectors on the ground at Boeing’s facilities, making sure safety improvements are actually happening. They’ve also halted Boeing’s plans to ramp up production of the 737 Max, hitting the company where it hurts – their bottom line.

Boeing’s production slowdown has forced airlines like Southwest and United to adjust their growth plans. Imagine planning a big party and finding out the caterer can’t deliver. That’s how these airlines feel right now.

Titanium Trouble and the Supply Chain Snafu

As if things couldn’t get worse, Boeing’s dealing with a supply chain scandal. Spirit AeroSystems, a major supplier, said some titanium parts came with falsified documents. Even though tests confirmed the material is airplane-grade, the drama doesn’t help Boeing’s already tarnished reputation.

The Takeaway: Boeing's Bumpy Flight Ahead

So, what’s next for Boeing? They’re looking to finalize a deal to buy fuselage supplier Spirit AeroSystems, but time’s ticking. Meanwhile, the Department of Justice might decide to prosecute them over the 737 Max crashes. It’s like Boeing’s trapped in an episode of "Survivor," but with less tropical beaches and more Senate hearings.

In the end, Dave Calhoun’s day on Capitol Hill was like a turbulent flight – bumpy, stressful, and leaving everyone wondering if they’ll reach a safe landing. Boeing’s got a lot of work to do to regain trust, and the Senate isn’t letting them off the hook anytime soon. Fasten your... no, wait. Just hang on tight, because this ride isn’t over yet.
 

Big Tech's #1 Energy Stock You’ve (Probably) Never Heard Of… 

Behinds the scenes of Big Tech’s AI tsunami, Constellation Energy (NASDAQ:CEG) has become the rock star everyone’s talking about. The company’s stock has skyrocketed more than 85% this year, making it one of the top performers within the S&P 500 Utilities Select Sector ETF (XLU). But what’s driving this stellar ascent? It all boils down to AI and its unquenchable thirst for energy.

Big Tech’s Power-Hungry Future

Constellation’s stock surge can be traced to its unique position as the largest nuclear plant operator in the US. Wall Street is buzzing with anticipation over potential "collocation" deals, where Big Tech giants like Amazon, Alphabet, Microsoft, and Meta might set up data centers right next to Constellation’s nuclear plants. This strategic move would provide them with the massive amounts of power needed for their AI and cloud computing operations.

Joe Dominguez, Constellation’s CEO, mentioned at a recent media roundtable that the company is deeply engaged in discussions with several interested parties. This makes sense given that data centers in the US are expected to more than double their power demand by 2030, thanks to AI, according to McKinsey & Co.

Constellation’s Nuclear Advantage

Constellation stands out in the energy sector for several reasons. It operates the largest fleet of nuclear reactors in the US, with 21 reactors generating carbon-free electricity. This makes it an ideal partner for Big Tech companies aiming to meet their carbon emissions goals. Unlike regular utility companies, Constellation isn’t regulated, allowing it to set its own energy rates without needing regulatory approval. Neil Kalton, a senior equity analyst at Wells Fargo, aptly noted, “Constellation is really more of an energy play.”

Constellation also benefits from the Biden Administration’s Inflation Reduction Act, which supports the green energy transition. The company produces power at roughly $25 per megawatt-hour, while the IRA sets a selling floor price of about $45 per megawatt-hour, with no upper limit. This means Constellation can potentially make significant profits.

AI and Nuclear: A Winning Combination

The rise of AI is acting as a catalyst for Constellation’s growth. Data centers that support AI applications use seven times more power than traditional ones, leading to increased energy demand. Constellation’s first-quarter results reflected this trend, with adjusted operating earnings jumping to $1.82 per share from $0.78 a year ago. This strong performance allowed the company to increase its share repurchase program by $1 billion, after already buying back $1.5 billion worth of shares since 2023.

Support for nuclear energy is also gaining momentum as a clean energy source to power electric vehicles, heavy industry, and emerging technologies like AI. Constellation is looking to extend the life of its existing nuclear plants and explore opportunities for next-generation reactors at current sites. They’re also negotiating deals with tech giants to power their data centers, providing more stability and visibility into future earnings growth.

The Stock Surge and What’s Next

Constellation’s stock has more than doubled over the past year, driven by rising earnings and AI optimism. However, this surge has brought its dividend yield down to 0.7%, compared to 1.3% for the S&P 500, and pushed its valuation higher. The stock now trades at a forward P/E ratio of over 26 times, higher than the S&P 500's 21.5 times and its closest utility peers' 17 to 22.5 times.

 

While Constellation has strong growth prospects, especially with AI boosting demand for nuclear energy, some analysts suggest waiting for a pullback before buying. Other utilities with similarly strong growth prospects trade at lower valuations, potentially offering higher total returns over the long term.

In summary, Constellation Energy (NASDAQ:CEG) is riding the AI wave to new heights, thanks to its nuclear power capabilities and strategic initiatives. The company’s ability to provide reliable, carbon-free energy makes it a key player in the future of AI-driven power demand. Whether you’re a tech giant looking for a power boost or an investor seeking the next big opportunity, Constellation Energy might just be the shining star on the horizon.

 

Stocks.News does hold positions in Amazon, Alphabet, Meta, and Microsoft as mentioned in the article.