Jefferies Downgrades PSEG to Hold Amid Data Center Deal Uncertainty

Jefferies has downgraded Public Service Enterprise Group (PEG) from Buy to Hold, citing diminished confidence in the utility's prospects regarding a strategic nuclear data center partnership. The move reflects growing skepticism about the viability of high-capacity power deals in the current regulatory environment. The downgrade is primarily driven by New Jersey's ratepayer protection pledge. This regulatory framework is designed to ensure that existing utility customers do not bear the costs of specialized infrastructure projects. However, analysts suggest this pledge may inadvertently reduce the attractiveness of such deals for hyperscalers, who seek stable and efficient power procurement for AI-driven data centers. Jefferies has established a price target of $89 for the stock. The market responded with a modest decline, as PEG shares fell 1.3% during Wednesday's trading session following the announcement. This development highlights a broader tension within the energy sector: the struggle to balance the massive power requirements of the artificial intelligence boom with state-level consumer protections. Investors are now monitoring whether PSEG can successfully navigate these regulatory constraints to secure the high-value contracts necessary for its growth strategy.