NRG Energy Shares Drop 13-16% After Underwhelming Data Center Contracts

NRG Energy's stock experienced a significant decline following its second-quarter earnings report and announcement of its first data center power supply agreements, which failed to meet investor expectations. Despite beating earnings per share and revenue estimates, the market reacted negatively due to the size and scope of the 295 megawatt data center contracts, which were considered modest compared to competitors' deals. Wall Street analysts remain mixed, with an average price target suggesting potential upside, but valuation metrics like GuruFocus' GF Value indicate a possible downside, reflecting market uncertainty. The utilities sector overall has outperformed the broader market in 2025, partly driven by demand from data centers powering AI, but NRG's recent results and deals have underscored the competitive pressures and high expectations in the space. While NRG has shown strong earnings growth and market outperformance year-to-date, investors are cautious, weighing the company's future earnings outlook and strategic moves in the evolving energy and data center markets. The mixed analyst ratings and recent stock drop highlight the complexity of navigating investments in this sector amid fluctuating demand and competition.