Shares of NRG Energy tumbled 10.3% to $124.20 on August 7 as investors digested a second-quarter report that delivered power on one metric but stumbled on the ones Wall Street watches most closely — and unveiled an ambitious, capital-heavy pivot toward building power plants for AI data centers.

The Earnings Were a Mixed Bag That Spooked a Stock Already Up Big

NRG posted adjusted earnings of $1.49 per share, missing the consensus estimate of $1.66 by 10.2%.

Revenue came in at $7.48 billion versus an expected $7.79 billion, marking a second straight quarter of missing expectations. Yet adjusted EBITDA (operating profit before accounting deductions) hit $1.22 billion, up 33.9% from $910 million a year ago. The disconnect: higher interest payments and depreciation from the LS Power acquisition dragged adjusted net income down , meaning the deal that fueled the EBITDA beat is simultaneously eating into the bottom line. After rallying from $124 to $138 in a single week, the stock had priced in a cleaner beat.

Texas, NRG's Core Market, Is Running Cool

Texas adjusted EBITDA fell $131 million year-over-year as power prices in Houston averaged $33 per megawatt-hour — 8% below last year and far short of the company's $52 planning assumption.

An unexpected $70 million hit from Virginia's re-entry into a regional carbon program added further drag.

Management acknowledged NRG is tracking below the midpoint of full-year guidance , relying on hedges to stay within range.

The Hyperscaler Deal Is Bold but Far Off and Capital-Intensive

NRG has agreed to principal terms with an unnamed cloud and AI giant to build a 1.2 GW natural gas plant in Texas , potentially expanding to 2.4 GW.

At full operation — targeted for late 2029 — the project is expected to generate $500 million in annual EBITDA and $375 million in free cash flow. That's transformative, but the 2026 capital plan now includes $721 million in data center investment, funded by deferring debt reduction — pushing NRG's leverage target out from 2028 to 2029.

Management's Confidence Versus the Market's Skepticism

NRG reaffirmed full-year adjusted EPS guidance of $7.90–$9.90 and maintained its pledge to return at least $1 billion annually through buybacks. But investors now must weigh three years of heavy spending and execution risk before the data-center revenue arrives — all while the core Texas business softens. The sell-off is a reality check: EBITDA strength alone won't carry the stock if earnings keep missing.