Nuclear Stocks Soar as Tech Giants Invest in Nuclear Power to Fuel AI Ambitions

With the rise of AI, data centers have seen a significant increase in energy consumption. A recent report from HSBC on Tuesday indicated that by 2030, data centers could account for 9% of U.S. electricity consumption—more than double the current figure. The International Energy Agency (IEA) forecasts that power consumption by data centers, AI, and cryptocurrency sectors could double by 2026, making the future tightening of power supplies inevitable.

Nuclear power has been a safe, reliable, and economical source of nearly 20% of the U.S. electrical generation over the past two decades. It remains the largest contributor (over 70%) to non-greenhouse-gas-emitting electric power generation in the country.

Moreover, the U.S. leads globally in nuclear power capacity and boasts the longest average operating times—42.1 years. Although SMRs largely remain unapproved by regulators and new nuclear power plants are time-consuming and costly to build, often suffering from delays and budget overruns, Kelly Trice, president of Holtec, suggests that restarting old reactors could be a simpler, more economical, and faster alternative compared to constructing new nuclear facilities.

In addition to the pull from data centers, the reshoring and expanding domestic production of chips, electric vehicles, batteries, and solar panels are also driving electricity demand. Moreover, geopolitical risks heightened by supply disruptions from the Russia-Ukraine conflict have underscored the necessity for energy security. Fund managers are now reassessing nuclear energy, traditionally avoided by environmentally-focused investors, anticipating its resurgence.

Robert Lancastle, a portfolio manager at J O Hambro, mentions that the global energy supply needed to sustain the ongoing expansion of artificial intelligence is unlikely to be met without nuclear power.