For the past several months – really, since ChatGPT’s launch in late 2022 – we’ve been laser-focused on all things artificial intelligence. And of course, the AI Boom that’s unfolding right now presents a lot of opportunities as well as risks. I mean, just imagine. This powerful tech could do things like help researchers develop new cures to treatment-resistant illnesses. And just as easily, it could put many humans out of a job. But we believe that one of the biggest risks this boom presents is a fundamental energy problem.
Simply put, AI data centers require a lot of energy to run. And with incumbent methods and infrastructure, we may not have enough to power them.
But the world may have found a solution to this existential AI problem in the unlikeliest of places – nuclear energy.
Nuclear: An Unlikely Hero?
At one time, nuclear power was hailed as the best energy source in the world. But that was years ago – before headline disasters like Fukushima in 2011, Chernobyl in 1986, and Three Mile Island in 1979. Those catastrophes were a stark reminder that nuclear power plants can be exceptionally dangerous, not just to humans but to entire ecosystems.
Nuclear power technology, though, has improved dramatically over the last few decades. And thanks to those advancements, nuclear power plants are no longer all that dangerous. The industry has developed new fuels that are more resistant to radiation, corrosion, and higher temperatures, not to mention advanced instrumentation to monitor every system and process. The underlying technology has meaningfully improved. In fact, studies show that nuclear power plants are significantly safer than traditional power plants, like that of coal, oil, and natural gas.
Indeed, as the World Nuclear Association notes, “In the 60-year history of civil nuclear power generation, with over 18,500 cumulative reactor-years across 36 countries, there have been only three significant accidents at nuclear power plants.”
So, if nuclear energy is indeed safer than pretty much all other energy sources, then why aren’t we using more of it?
After all, it’s far more efficient than any other energy source, too. It has a so-called ‘capacity factor’ – the percentage of time a plant is producing maximum power – of 93%, meaning nuclear power plants produce maximum power about 93% of the time.
By comparison, natural gas plants have a capacity factor of less than 60%. Coal is down at 40%. Solar is barely at 25%.
Nuclear energy is far more efficient than all of them!
Cleaner and Cheaper Than Traditional Methods
Nuclear is also one of the cleaner energy sources out there.
In fact, Bank of America estimates that nuclear energy emits less than 200 tons of carbon dioxide per gigawatt-hour of production. That is far less than coal (>800 tons of CO2/GWh), oil (>500 tons), and natural gas (>300 tons).
But it’s also far less than solar and hydro, about the same as wind, and only slightly more than biomass.
In other words, nuclear energy is cleaner than most other energy sources.
And, perhaps most importantly, it’s the cheapest mass energy source out there as well.
It costs an estimated $71 to generate one megawatt-hour of nuclear energy. By comparison, coal costs about 30% more per megawatt-hour. Natural gas costs nearly 50% more, and wind and solar are about double the cost.
So… nuclear energy is one of the cheapest… most efficient… cleanest… and safest energy sources in the world.
That’s why we believe we should be using more nuclear energy, especially to help support the continued rollout of AI infrastructure and applications. As we mentioned earlier, AI data centers require a lot of power to run. In fact, on average, a ChatGPT query needs nearly 10 times as much electricity to process as a Google Search does.
That’s why Goldman Sachs estimates that AI will increase datacenter power demand by 160% into 2030.
We need more nuclear energy to help support that massive increase in AI energy demand.
And by the looks of it, we will get that very soon.
All-In on a Nuclear Resurgence
Last week, Microsoft (MSFT) tapped utility provider Constellation Energy (CEG) to restart the long-dormant Three Mile Island nuclear power plant.
As part of the deal, the two will reopen the plant. And for the next 20 years, Microsoft will buy all the energy that the plant produces to help power its AI data centers.
Clearly, Microsoft believes that nuclear energy is safe – and that it’s critical to help support the AI Boom.
It isn’t alone.
Earlier this year, Amazon (AMZN) bought a 960-megawatt data center campus powered by nuclear energy in Pennsylvania. Alphabet (GOOGL), meanwhile, has invested in nuclear energy startup TAE Technologies. For his part, Tesla (TSLA) CEO Elon Musk has called shutting down nuclear power plants absolute “madness.”
Big Tech is all-in with this resurgence.
So is Wall Street.
Just this week, 14 major Wall Street banks – including Goldman Sachs, Morgan Stanley, and Bank of America – announced that they would support an effort to triple the world’s nuclear energy capacity by 2050.
From the Bottom to the Top
OK, now how about our government?
They’re going all-in, too.
Back in March, the U.S. Department of Energy made a $1.5 billion conditional loan commitment to help restart the 800-MW Palisades nuclear plant in Michigan. That means two major decommissioned U.S. nuclear power plants – Palisades and Three Mile Island – will likely restart within the next few years.
And this backing is happening at the local level, too.
In Maryland – where they draw 80% of their clean energy from the Calvert Cliffs Nuclear Power Plant – state legislators are pushing to create financial incentives for more nuclear power production. In Texas – where a nuclear reactor hasn’t been built in decades – Gov. Greg Abbot is looking to build small modular reactors to support the state’s growing need for on-demand power. Down in Florida, the U.S. Nuclear Regulatory Commission just approved the extension of the operating license for the Turkey Point nuclear power plant located just south of Miami.
And this isn’t just a U.S. phenomenon.
Japan – home to the most recent nuclear disaster in Fukushima – is restarting its nuclear reactors after shunning them a decade ago. India is seeking nearly $30 billion in private funding to expand nuclear energy production and hopes to build almost 20 new reactors by 2032. Sweden wants to spend about $40 billion to add two new nuclear reactors by 2035. France is prioritizing nuclear energy in its new energy initiatives. Same with the United Kingdom.
At this point, folks, the question is, who isn’t going all-in with nuclear energy?
It seems the Nuclear Energy Renaissance has arrived. And we think it could mint massive profits for investors.
The Final Word on Nuclear Energy
Remember: Part of the reason why the world is returning to nuclear energy is because it needs more power for the AI Boom.
Right now, companies around the world are investing in AI hand over fist. And when billions of dollars are flowing into one industry, those in and around that industry could make a lot of money.
Nuclear energy stocks fall into that category.
That’s why we think uranium stocks could be big winners here. These companies mine the core material used in nuclear energy reactions. So, as nuclear energy production increases over the coming years, demand for uranium should soar, leading to huge windfalls for those mining it. Think names like Cameco (CCJ), the world’s second-largest uranium miner.
Nuclear reactor equipment suppliers should soar as well. These firms provide equipment like fuel rods, steam generators, and reactor pressure vessels to nuclear power plants. As the world reopens old plants and builds new ones, demand for that equipment should soar. Sellers of that equipment – like BWX Technologies (BWXT) – should win big.
Of course, the actual nuclear reactor operators should excel, too. We like the companies that are working on new nuclear technology, like small modular reactors (the ones Texas is considering). NuScale Power (SMR) is a specialist here.
And utility firms with nuclear energy exposure should profit from this renaissance, too. These firms will benefit from adding nuclear energy generation to their wheelhouse and deploying that energy to homes and businesses. Names like Constellation and Vistra (VST) are interesting there.
In other words, there are myriad ways that investors could make a lot of money in the Nuclear Energy Renaissance.
In fact, good money is already being made in this boom. Since early September, nuclear energy stocks are up anywhere from 20% to 50%.
This is a huge investment theme. And it’s one we are paying very close attention to.
Learn more about how to profit in this new era.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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