Southern Company Just Inked a Power Agreement With a Leading Big Tech Stock

For years, utilities were the quiet, reliable sector of the stock market. Artificial intelligence changed that over the past 18 months.

The data centers that train and run AI models need huge amounts of reliable power. This tailwind has turned power companies into unlikely partners for the biggest names in tech.

Southern Company (SO) has spent the past year signing contracts with some of the country's most power-hungry customers. Now one of Big Tech's best-known names has joined the list. This time, the story runs through two nuclear plants in Georgia.

Why SO Stock Is Riding the AI Power Boom

To understand the new deal, let’s see how fast Southern Company's business is growing.

On its second-quarter earnings call on July 30, the company reported adjusted earnings of $1.13 per share, up $0.21 per share year over year. It was also above management’s earnings estimate of $1 per share. 

For the first half of 2026, adjusted earnings stood at $2.46 per share. Chief Financial Officer David Poroch said the company now expects full-year results near or at the top of its guidance range of $4.50 to $4.60 per share, up from $3.41 per share in 2021. 

The driver is simple: people and businesses are using more electricity. Weather-adjusted retail electricity sales rose 2.3% through June. Poroch called it the strongest growth for that period in nearly two decades.

Data centers are the biggest accelerant, given usage surged 55% year over year in Q2. Southern Company's data center load now tops 1.2 gigawatts, up more than 500 megawatts in a year.

Notably, the company has more than 17 gigawatts of contracted large customer demand coming online by the middle of the 2030s.

Southern Company Stock Gets a Nuclear Boost from Google

Southern's Georgia Power and Alphabet's (GOOG) (GOOGL) Google announced a new agreement to expand the output of nuclear units at the Vogtle and Hatch plants, according to a company statement. The deal still needs approval from the Georgia Public Service Commission.

Here's how it works. Google will support upgrades, known as uprates, on Georgia Power's owned share of the reactors. Those upgrades should add about 96 megawatts of new capacity to the grid serving Georgia Power customers. The company said Google's subscription should enable about $900 million in projected customer benefits over the units' life.

The agreement appears in filings at the Georgia PSC, including Docket 44280. Those filings create a new nuclear uprate tariff. They also ask regulators to approve an extended power uprate for Plant Hatch Units 1 and 2. 

Regulators approved a similar upgrade for Plant Vogtle Units 1 and 2 in the 2025 Integrated Resource Plan. Under the tariff, Google receives the zero-emission credits tied to the extra power. The credits represent the clean energy value of nuclear generation.  According to the company, the structure helps shield customers who don't participate from the added costs of the uprate work.

"We appreciate Google's continued leadership in this space and partnership in developing this program," said Aaron Mitchell, Georgia Power's senior vice president of strategic growth.

Google's Lucia Tian, director of advanced energy technologies, said the collaboration is “helping to deliver hundreds of millions of dollars in direct customer benefits.” Nuclear already plays a major role in Georgia. Georgia Power said more than 25% of the energy it produced last year came from nuclear.

An extended power uprate sounds complicated, but the idea is straightforward. Engineers upgrade key equipment inside an existing plant, including turbines, pumps, motors, and cooling systems, which lets the reactor run at a higher licensed power level. The result is more electricity from the same reactor, using the same fuel design and plant infrastructure, according to the company.

Georgia Power doesn't have to build a brand new plant to add capacity.

The Google Partnership Started With a Data Experiment

Large customers wanted clearer information about their energy use and emissions. So Southern Company teamed up with Singularity Energy to build a platform that tracks both on an hourly basis, according to a company statement.

Singularity is a portfolio company of Energy Impact Partners, a venture capital platform that Southern Company helped found. In 2024, the company ran a six-month pilot with 10 commercial and industrial customers. Google was one of the original participants.

"This goes far beyond traditional sustainability goals, requiring detailed electricity and carbon data to measure progress and inform action," said Soazig Kaam, technical program manager for Google's Energy Products.

Kaam also praised the utility's approach. "Georgia Power was a true partner in this effort, listening to our needs and involving us early on in the testing of a potential solution," Kaam said.

Cam Hardin, Georgia Power's director of customer solutions, said the platform gives customers "an overall picture of their sustainability metrics not previously possible."

What the OpenAI Deal Means for SO Stock Investors

Google isn't the only tech name on Southern Company's roster. Last quarter, Georgia Power signed a 3.2-gigawatt contract with OpenAI lasting 25 years for a site near Savannah, Ga. Service begins in phases starting in 2028. The contract includes 1 gigawatt of flexible demand, meaning the site can reduce its usage when the grid is under the most stress. Alabama Power added about three gigawatts through three projects in the same period.

But what happens if a data center customer walks away?

Chief Executive Officer Chris Womack said large customer contracts include minimum bills that cover at least 100% of the added cost to serve them. They also carry termination payments backed by collateral. Across the full 17-gigawatt portfolio, that collateral totals about $21 billion, Poroch said.

Meanwhile, base rates in Georgia and Alabama stay stable until 2029. "Electric rates are not going up in our territory," Womack said. "Stability is savings."

Southern Company's pipeline of potential projects remains above 75 gigawatts, while another eight gigawatts are in late stages. None of the generation from active bidding processes in Alabama and Georgia is included in the current capital plan, Poroch said.

His rule of thumb: roughly $2 billion of investment for each gigawatt of new generating capacity. Womack summed up the data center wave on the call. "The load is very real," he said. The Google nuclear deal suggests the biggest tech companies agree.

Is SO Stock Undervalued?

Down 15% from all-time highs, SO stock has returned 61% to shareholders after adjusting for dividend reinvestments.  Analysts tracking Southern Company stock expect adjusted earnings per share to expand from $4.30 in 2025 to $6.15 in 2030. Out of the 24 analysts covering SO stock, six recommend “Strong Buy”, one recommends “Moderate Buy”, 15 recommend “Hold”, and two recommend “Strong Sell”. The average Southern Company stock price target is $100.47, above the current price of $85. 

On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.