One of the clearest, most powerful industry-level trends in 2024 was the renaissance of nuclear power and the related equities — one powered in large part by the artificial intelligence (AI) revolution and the technology companies at the center of it.
Take the case of the VanEck Uranium and Nuclear ETF (NLR). That exchange traded fund notched another solid annual performance, as nuclear power continued moving into the spotlight as a viable green energy source and the power lynchpin of the AI movement. Time will tell if nuclear energy stocks and NLR can deliver impressive performances again in 2025, but the ingredients are in place for more upside.
Consider the data center boom. Data centers are the physical structures where the nuts and bolts of AI take place. They also have significant power needs, and they’re increasingly relying on nuclear to “keep the lights on.” Electricity demand from data centers isn’t going anywhere and is expected to continue increasing, potentially signaling long-term opportunity with assets such as NLR.
Data Centers Buoy NLR Thesis
For investors considering NLR as a tactical idea in 2025, results prove the soaring power demands of AI enablers.
“Data centers powering artificial intelligence and cloud computing are pushing energy demand and production to new limits. Global electricity use could rise as much as 75% by 2050, according to the U.S. Department of Energy, with the tech industry’s AI ambitions driving much of the surge,” reported Bradley Hoppenstein for CNBC.
Among the reasons that nuclear has become vital in the AI equations is the source’s reputation for abundance, cost-effectiveness and reliability — all of which are priorities for tech companies. Add to that, nuclear is increasingly viewed as a green energy source, meaning technology companies, many of which have long sought to reduce carbon emissions, don’t have to balance AI goals against previously established environmental objectives and standards.
That’s quite a turn from the years in which fears about nuclear safety risks dominated industry storylines. Today, some of the biggest names in tech are signaling they’re believers in nuclear’s reliability and the industry’s safety standards, and those factors could be supportive of NLR over the long-term.
“Google, Amazon, Microsoft and Meta are among the most recognizable names exploring or investing in nuclear power projects. Driven by the energy demands of their data centers and AI models, their announcements mark the beginning of an industrywide trend,” according to CNBC.
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