WAT's Risk-On High Return Investment 2025

Hello everyone using the MOOMOO securities app, this is WAT.

While striving to build assets through index investment using NISA... but wanting to achieve slightly higher returns with surplus funds. That's human nature.

I would like to introduce themes that are currently drawing attention as satellites rather than core investments.

【Table of Contents】

1. AI Boom and Gold Rush

2. Challenges in Electrical Utilities in AI Demand

3. About the Nuclear Industry Sector

4. Related Stocks

5. Points to Note and Their Potential

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The rapid development of AI technology is leading the world into a major transitional period.

Since the emergence of ChatGPT, the practical application of AI has become more realistic, leading various companies to enter the AI development race. This trend has had a significant impact on the semiconductor industry, particularly boosting the demand for GPUs (graphics processing units) essential for AI computing.

According to estimates from Schneider Electric, the demand for AI power is said to be increasing at an annual rate of 26% to 36%, with the potential for it to exceed 10% of the world's total electricity consumption.

Nuclear power generation is now attracting attention as a means to supply this vast amount of power.

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AI data centers require a vast amount of power 24/7, 365 days a year in a stable manner.

The amount of electricity generated by nuclear power generation is higher than thermal power generation and photovoltaic power generation, and approximately 58 square kilometers (approximately the same as the area inside the Yamanote Line) of area is required to replace one unit of a nuclear power plant (1 million kW class).

Sam Altman, CEO of OpenAI and co-founder, has revealed plans to build multiple 5GW megadatacenters. The U.S. is said to have a power supply capacity of around 1200GW, requiring approximately 10 million solar panels for normal capacity.

In addition, concerns arise from the consumption of fossil fuels and the generation of carbon dioxide in thermal power generation, and the instability of power generation due to weather conditions in photovoltaic power generation.

Based on the above points, nuclear power generation can be considered the most suitable method of power generation for AI data centers, due to its "large-scale and stable power generation" and "clean energy" aspects.

Furthermore, the increase in power supply is not limited to just AI data centers.

The increasing demand for Bitcoin also contributes to the increase in power consumption.

Bitcoin trading records its data on the blockchain. The act of verifying if the transactions are recorded correctly is called mining, and those who perform the verification can receive Bitcoin as a reward.

To mine Bitcoin as quickly as possible, companies worldwide use a large number of supercomputers. It is expected that the energy consumption for this will continue to increase.

According to CCJ's financial statements, the demand for electricity in data centers and cryptocurrency-related areas is expected to almost double in 4 years.

Conversely, the substantial boom over the next 10 years driven by AI and cryptocurrencies makes electricity supply the most critical issue globally.

Amidst this increasing demand, nuclear power accounts for about 10% of global electricity generation and serves as a primary energy source for developed countries like the EU (22%) and the USA (18%).

Currently, there are 60 nuclear reactors under construction worldwide, and it is said that upon completion, the power generation capacity will increase by 17%.

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When considering investing in stocks related to nuclear power generation, how do you all go about selecting stocks?

- Search on Google

- Enter the ticker symbol on X

- Ask chatGPT

There are various options, but if you want to comprehensively understand and invest in nuclear power generation, be sure to make use of the moomoo Securities app's industry-related chart.

Industry-related chart

Open the app

Navigate to "Market" -> "USA stocks"

Scroll down the screen to the middle or slightly below

Tap on the details of the "Industry-related chart"

Various industry information can be viewed

In addition to the theme of "Nuclear Power" this time, a wide range of the latest trend industries and industries that become lively once every few years are also available.

If you know related stocks but don't know their actual position within the industry, it is recommended to study with this information.

Now, let's actually take a look at "Nuclear Power."

Upstream Role

It is responsible for everything from mining uranium resources, the fuel for nuclear power generation, to manufacturing nuclear fuel. Specifically, it involves mining, refining, enriching uranium ore, and manufacturing nuclear fuel rods. The recycling (reprocessing) of used nuclear fuel is also part of the upstream process.

Mining companies' performance and stock prices fluctuate greatly depending on the price of uranium.

Even if the market price of uranium doubles, the cost of uranium mining does not double. This is because the profit margin increases due to price increases. Conversely, a decline in market price can be a headwind, so if you want to reduce risks even slightly, look at each company's financial statements, etc.

It is a good idea to investigate whether trading is based on the price (futures price) in a long-term contract where uranium is secured for a certain period in advance, or if it is based on the spot (a one-time purchase contract).

Role of intermediaries

Manufacturing of necessary equipment and machinery for the construction and operation of nuclear power plants, plant construction. Major equipment includes the reactor core, turbines, generators, and also includes the manufacturing of various auxiliary equipment and safety systems.

In the case of Japanese companies,

- Manufacturing of reactor equipment, plant construction: Mitsubishi Heavy Industries, Hitachi Ltd Sponsored ADR

- Manufacturing of nuclear-related equipment: IHI

can be given.

Downstream role

Responsible for the actual operation of power plants, as well as the disposal of used nuclear fuel and radioactive waste. The operation of the power plant includes daily operation management, regular inspections, maintenance, and more. Safe disposal and storage of radioactive waste are also important tasks.

In Japan, examples include electrical utility companies such as Tokyo Electric Power and Kansai Electric Power.

While it is part of their business, Kubota also manufactures facilities for radioactive waste disposal.

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Now let's introduce some U.S. stocks from various industries.

Upstream

Cameco Corporation (Cameco)

Market Cap:

It is the world's largest uranium production company based in Saskatoon, Saskatchewan, Canada.

In the global uranium market, it ranks second after Kazatomprom in Kazakhstan. It is an industry leader with a market share of approximately 16%.

Cameco mines uranium ore, performs chemical processing, and provides triuranium octoxide (U3O8). The attractiveness of Cameco lies in the high average grade of U3O8 (the uranium content in the ore).

They own premium assets such as McArthur River Mine and Cigar Lake Mine, with the world's highest grades of 6.72% and 17.03% (about 67 times and 170 times the world average grade), respectively.

There are advantages such as being able to produce a lot of uranium with a small amount of ore, reducing mining and processing costs, and reducing environmental impact (due to minimal waste rock processing), which provides a competitive edge.

NuScale Power（ニュースケール・パワー）

Market Cap:

I am designing a module-type nuclear reactor with an output of 77MWe.

77MWe may be smaller in scale compared to conventional large reactors of 1000-1500MWe, but it has the flexibility to combine up to 12 units.

The ability to customize this moderate scale is just right.

Investment bank Craig-Hallum in America has been bullish frequently towards the latter half of 2024, indicating a high level of attention to this trend.

Downstream

Permafix Environmental Svcs (Perma-Fix Environmental Services)

It is an environmental services company specialized in the treatment and disposal of radioactive waste and mixed waste generated from nuclear power plants.

They have unique treatment technology, strong regulatory compliance capabilities, abundant operational expertise, and an established market position. In particular, their treatment technology for complex waste containing both radioactive materials and hazardous chemicals has received high praise in the industry.

Furthermore, they own four specialized processing facilities with obtained permits, and have established long-term relationships with government agencies such as the DOE (U.S. Department of Energy), NRC (U.S. Nuclear Regulatory Commission), DOD (U.S. Department of Defense), EPA (U.S. Environmental Protection Agency), giving them a competitive advantage.

Especially successful in commercializing PFAS (Per- and Polyfluoroalkyl Substances) treatment technology, their unique solutions for difficult-to-treat waste are attractive.

Craig-Hallum has a bullish assessment of PESI, rating it higher than SMR.

If you want to invest in companies related to uranium and nuclear power generation, there are also ETF options available.

Global X Uranium ETF

Target Index: Solactive Global Uranium & Nuclear Components Total Return Index

It invests in a wide range of companies engaged in uranium mining and the manufacturing of nuclear-related components. This includes companies involved in uranium extraction, exploration, refining, and the manufacturing of equipment for the nuclear industry.

Number of Constituents: 50

Industry

Investment target country

There may be so-called late-blooming stocks that have not yet appreciated. Please tap on each stock from the industry-related chart and find attractive stocks.

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Geopolitical risks

In 2023, the USA imported a quarter of the Uranium used in nuclear power plants from Russia.uraniumRussiaimportedfrom Russia.

If Russia restricts supply, demand for mining companies will increase, but if the current import restrictions from Russia are lifted, there is a potential for a significant decrease in stock prices.

Capital Management

As you can see from the charts, the stocks introduced this time are all highly volatile. It is also a field where entities that can overturn the trend of a country intervene.

If you usually invest in large-cap stocks, do not overestimate your risk tolerance, and make sure to purchase in increments rather than all at once. Check economic news (such as uranium futures prices and the authorities' policies on nuclear power generation).

However, I think it's a hassle to look for news articles every morning, so it is recommended to add your holdings to MyPF and check the news section of the stocks.

Looking back at the past nuclear power boom, from 2005 to 2007, it was a time when attention was drawn to nuclear power generation due to soaring oil prices and concerns about global warming.

In 2005, the Energy Policy Act of 2005 was enacted, introducing a loan guarantee program for the construction of new nuclear power plants.

At that time, CCJ showed a +600% surge in just 4 years.

If the subsequent deterioration of the funding environment due to the Lehman shock had not occurred, the world might have been different from now.

Looking back at the AI boom starting from 2023, NVDA showed an unprecedented surge in market cap by +800% in just 2 years.

In terms of amounts, approximately 3 trillion dollars (equivalent to 465 trillion yen in today's Japanese currency) can be said to have flowed into the funds. This is the fund for NVDA's only stock, and the inflow of funds into the semiconductor industry as a whole can be considered an enormous amount.

Nuclear Power requires specialized technology and high entry barriers in terms of expertise, even more so than semiconductors. Existing companies are likely to reap strong benefits once this boom reaches its peak.

For example, if only 1% of the funds flowing into NVDA that were introduced this time were to be invested, it would result in an incredible return.

It can be said to have an extraordinary return just by investing 1% of the amount flowing into NVDA mentioned this time.

Please do not overlook the ripples on the water surface before a big wave comes.

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Finally

AI, and the 'electricity' that supports the foundation of the new era such as cryptocurrency.

In this context, Nuclear Power plays an important role in providing clean and stable electricity. While investing in this sector may aim for significant short-term returns, it can also be seen as an investment in important infrastructure to support technological innovation over the next 10 years.