Nuclear energy is experiencing a rebirth and shares of producers of this power source are going along for the ride. Just look at the VanEck Uranium and Nuclear ETF (NLR). One of the oldest and largest exchange traded funds in the category, NLR was up 25.61% year-to-date as of Nov. 1.
It’s not just nuclear’s status as a viable form of green energy that’ supports NLR bullishness this year. Enthusiasm for nuclear energy stocks and ETFs such as NLR is also rooted in the energy source’s status as a foundational piece in the artificial intelligence (AI) revolution. More technology companies looking to power AI efforts are turning to AI. That could bode well for NLR’s long-term thesis.
New AI/nuclear headlines may confirm that much. In recent weeks, Google parent Alphabet (GOOG), Amazon (AMZN), and Microsoft (MSFT) each announced various nuclear investments to ensure they have the energy necessary to power their AI ambitions.
Last month, Amazon “revealed three deals, including an investment in startup X-Energy and two development agreements that aim to add around 300 megawatts’ worth of capacity in both the Pacific Northwest and Virginia, two data center hot spots,” reported TechCrunch.
Big Tech Could Be Big Catalyst for Nuclear
The implications of the AI/nuclear intersection are pertinent to investors considering NLR for multiple reasons. First, AI is still in its early innings, indicating tech’s embrace of nuclear has ample room to grow from here. Second, technology companies have substantial energy needs. As such, they want to consume reliable power that’s cost-efficient and clean.
“Nuclear energy has attributes uniquely suited to meet these demands, and tech companies are new customers that could build the order book that is required for new reactors to be deployed,” reported the Atlantic Council.
In addition to the massive energy needs of technology companies, these corporations could increasingly lean into nuclear because it’s clean energy. Many tech companies, including those with AI exposure, have long prioritized carbon neutrality and sustainability. However, it can be a delicate balancing act between sustainability and growing profits. With nuclear, tech companies access a cost-effective power source with real sustainability credentials.
“The recent announcements by Google and Amazon demonstrate a willingness to finance the development and deployment of advanced reactors for their own energy requirements and climate targets, at a scale that could rapidly drive down capital costs for future new builds and advance the clean energy transition nationwide,” according to the Atlantic Council.
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