For most of 2026, the market's bearish logic on US power companies can be summarized in one sentence: no company was willing to sign long-term power purchase agreements (PPAs) for data centers in the PJM (Principal-Jackson Interconnected Region) grid area. Last week, Amazon broke this deadlock. This Tuesday, Google joined in, and its deal is more than five times the size of Amazon's. Goldman Sachs analyst Wijaya said after the Amazon agreement was announced: "We all know how quickly the market winds in the power industry can shift." And now, in just one week, the market winds have shifted twice. More importantly, the truly crucial catalyst has yet to arrive.
On October 12, the Federal Energy Regulatory Commission (FERC) is expected to rule on the regulatory framework for large-scale electricity loads in PJM. If the IRAS mechanism is ultimately approved and largely retains the currently proposed regulatory requirements, then starting in mid-2027, all large data centers built in the PJM grid area must secure their own additional power supply, or face priority curtailment in the event of a grid emergency.
However, the number of existing nuclear reactors in the United States is ultimately limited, and the nuclear power resources available for long-term power purchase agreements are not inexhaustible. Therefore, we believe that Google's purchase of 3,590 megawatts is likely only the lower limit, not the upper limit, of its future procurement scale. Within just seven days, two hyperscale cloud computing companies have signed long-term agreements with the largest nuclear power operator in the United States. Meanwhile, the valuation of independent power generator (IPG) stocks in the United States remains at only about 7 times EBITDA, and investor positions in uranium-related stocks are also low.
The market is currently facing two diametrically opposed assessments. One possibility is that the market is correctly priced in: political factors and regulatory agencies will continue to restrict the development of IPG, keeping this sector undervalued for a long time. The other, which we believe is much more likely, is that other large technology companies will soon join the competition, queuing up for the same batch of nuclear power resources. Of course, regulatory risks still exist. After all, FERC has already postponed the implementation of the RBP mechanism once, and it is entirely possible that the relevant decision will be postponed again, which requires continuous monitoring.
