From the recent global financial news headlines, the investment heat of nuclear power and enriched uranium has basically been on par with the dominance of 'artificial intelligence' in the capital markets since 2023. Investors believe that 2024 will be a super year for nuclear energy stocks and uranium mining stocks with 'super bountiful harvest'.

In order to accelerate the expansion and construction of data centers to meet the explosive growth in demand for artificial intelligence and cloud computing capabilities, Amazon, Microsoft, Google, and other US tech giants are all targeting the clean, efficient, and stable energy source - nuclear power, to provide 24/7 uninterrupted power for their expanding data centers. Recently, this has driven the global stock market's concept stocks related to nuclear power and led to a continuous rise in uranium mining company stock prices.

Since the meltdown of the Fukushima Daiichi nuclear power plant in Japan, after experiencing more than a decade of 'investment hibernation', nuclear power, along with its core fuel - uranium, has re-entered the global investor's spotlight. Especially uranium, which has been one of the worst-performing 'hard commodities' for a long time, has experienced an extreme low this year, with prices only outperforming the plummeting lithium prices due to the sluggish demand for electric cars in recent years.

Price Meltdown - uranium is one of the worst-performing 'hard commodities' this year.

Why is uranium so important?

Uranium is one of the most important fuels in nuclear energy production, especially uranium-235, which releases tremendous energy through nuclear fission. In a nuclear reactor, the fission chain reaction of uranium is precisely controlled to generate stable heat energy for electricity generation. Nuclear energy, as an efficient and clean form of energy, is closely related to the physical properties and fission reactions of uranium.

In a nuclear power plant, the nuclear reactor is the core part, which is the equipment used to obtain nuclear energy by controlling the fission chain reaction. In a nuclear power plant, the nuclear reactor uses uranium-235 as the core fuel, releasing a large amount of energy through induced fission by slow neutrons. This energy is released in the form of heat and used to generate steam by heating the coolant to drive turbines for electricity generation.

Enriched uranium is the most crucial component of nuclear reactor cores in nuclear power plants. Uranium-235 is the only naturally occurring highly fissile isotope, but it only accounts for a small fraction in natural uranium (only about 0.7%). Natural uranium consists of about 99.3% uranium-238 (which is not easily fissionable), while uranium-235 (fissionable isotope) only makes up about 0.7%, insufficient to sustain effective chain fission reactions. Therefore, to effectively utilize nuclear fission in a nuclear reactor, the uranium-235 content usually needs to be increased to around 3% to 5% through enrichment techniques, a process known as uranium enrichment.

The uranium fuel rods in a nuclear reactor are typically made of enriched uranium (with higher uranium-235 content). In a nuclear reactor, the fission reactions of uranium-235 release heat, neutrons, and gamma rays. The enriched uranium used for nuclear power plants is usually referred to as low-enriched uranium (LEU), with uranium-235 content ranging between 3% and 5%, specifically for civilian nuclear energy generation.

Tech giants are investing heavily in advancing nuclear reactor construction or restarts, combined with recent research data showing that if companies focusing on uranium mining do not conduct large-scale mining of new mines, the uranium market will soon face a severe supply shortage. Under the recent surge in market enthusiasm for nuclear energy and enriched uranium investments, mining companies closely associated with the basic resources needed to restart or build large-scale nuclear reactors—uranium mines—have seen their stock prices soar rapidly, attracting investors to embrace those previously dormant uranium mining stocks.

If new mines fail to start production smoothly, the uranium market will face a severe supply shortage.

In the US stock market, the Global X Uranium ETF (URA.US) that tracks top uranium mining and enriched uranium companies worldwide surged over 7% as of Wednesday's market close, with a gain of up to 26% since September, after a long period of low prices for this ETF.

USA technology giants tacitly embrace nuclear energy.

With AI technology, especially the widespread adoption of large-scale AI models like ChatGPT, data centers have become the most essential facilities for efficiently processing and storing large amounts of data. In 2023, ChatGPT swept the world, Sora's WenSheng videos with large models were unveiled in 2024, and NVIDIA's unparalleled performance in the AI field for multiple quarters, could mean that human society gradually enters the AI era starting from 2024. The large data centers are arguably the most core large-scale infrastructure projects in the AI era, vital for the efficient operation of generative AI applications like ChatGPT and the iteration of AI large models like GPT-4o.

Amid the current and long-term global decarbonization trend, nuclear energy, as an efficient and stable clean energy source, has become one of the preferred energy sources for technology giants such as Amazon, Google, and Microsoft. This energy source, which combines cleanliness, stability, and efficiency, is expected to provide 24/7 uninterrupted strong power support for their immensely large data centers. Therefore, the current support for nuclear energy from global politicians and technology companies may be stronger than at any time since the 1970s.

On Wednesday, tech giant Amazon announced plans to fund the construction of several small nuclear reactors in Washington state and invest in the nuclear energy startup X-energy. Previously, Google announced on October 14th that it had reached an agreement with the nuclear energy startup Kairos Power to purchase 500 megawatts of 24/7 carbon-free electricity from Kairos' 7 small modular reactors (SMRs). Reportedly, the two companies are considering starting deliveries from the first SMR in 2030 and completing full deployment by 2035.

Google's Director of Energy and Climate, Michael Terrell, believes that adopting nuclear energy will complement Google's existing solar and wind energy investments, helping to achieve net zero energy goals. He also emphasized that nuclear power is a source of high-paying, long-term jobs. The U.S. Department of Energy (DOE) estimates that expanding nuclear energy capacity to 2,000 gigawatts by 2050 will require an additional 0.375 million workers.

In September of this year, Constellation announced a 20-year partnership agreement with Microsoft to establish the "Crane Clean Energy Center" and restart Unit 1 of the Three Mile Island nuclear power station. According to the agreement, Microsoft will purchase energy from the restarted nuclear power plant to help achieve its goal of using carbon-free energy to meet the power needs of its data centers.

Achieving the goal announced at the COP28 climate conference last December to triple nuclear power capacity by 2050 will be a daunting task. This would require the annual construction of as many reactors globally as the total number built in the past 20 years. However, countries from nuclear-loving France, undecided Japan, to anti-nuclear Italy are all making every effort.

A major shift in attitude by the US government.

The most notable thing is the complete turnaround in the US government's attitude towards nuclear reactors. Despite the closure of nuclear reactors due to pollution incidents or operational challenges over the decades, the US still produces about 30% of global nuclear energy. The Palisades plant in Michigan closed in 2022 after nearly 50 years of operation, but is now receiving up to $2.8 billion in federal funding to restart its nuclear reactor. In June, a generator in Wyoming broke ground after the government and Bill Gates pledged $3 billion.

A major nuclear power plant in Three Mile Island, Pennsylvania, experienced an accident in 1979, ending the so-called 'first atomic energy era' on a global scale. Now, with support from Microsoft and the US government, efforts are underway to restart its long-dormant nuclear reactor, potentially providing uninterrupted nuclear power support for Microsoft's large AI datacenters. When Google announced an agreement with a European startup to build small modular reactors this week, it echoed similar support as Microsoft.

However, the vast uranium resources and enriched uranium from Russia may be bidding farewell to the western world, possibly driving the change in the US government's attitude towards nuclear reactors. Russia holds a significant position in uranium mining, uranium enrichment, and the nuclear fuel supply chain, especially in the global uranium enrichment sector, where it has considerable influence. The ban by the US government on importing enriched uranium from Russia took effect in August, potentially further tightening the enriched uranium market, leading Western investors to continue diverting investments away from Russian uranium mining companies to the rest of the world. Additionally, with Kazakhstan producing nearly half of the world's uranium, the country's significant uranium tax increase could result in higher prices to compensate for losses in global uranium production capacity.

It is reported that the US government's ban on importing enriched uranium from Russia formally took effect in August. Given its core position in uranium mining and enriched uranium production, this ban could further tighten the enriched uranium market, prompting continued inflow of Western investors into global uranium mining companies outside of Russia closely related to uranium mining. Furthermore, with Kazakhstan's uranium production accounting for nearly half of the world's supply, the country might further raise prices to compensate for the doubling of its uranium tax, essential for the global uranium supply.