TLDR:
- Big Tech companies are investing in nuclear power to meet AI data center electricity needs
- Microsoft, Google, and Amazon have made recent deals with nuclear energy companies
- Small modular reactors (SMRs) are a focus of investment but are still experimental
- Nuclear energy stocks and related investments have seen significant price increases
- Projects like Three Mile Island’s reactor restart are years away from operation
In recent months, tech giants Microsoft, Google, and Amazon have made moves into the nuclear energy space, driven by the enormous electricity demands of AI-powered data centers.
Microsoft has inked a deal with Constellation Energy to restart a reactor at the infamous Three Mile Island nuclear plant. The agreement aims to bring the reactor online by 2028, with Microsoft committing to purchase all the electricity it can produce for the next two decades. This move marks a significant shift in the perception of nuclear power, especially given Three Mile Island’s history as the site of the worst nuclear accident in U.S. history.
Google, not to be left behind, has partnered with Kairos Power to purchase electricity from small modular reactors (SMRs). These miniaturized versions of traditional nuclear reactors promise lower costs and greater flexibility. However, SMR technology is still in its early stages, with no operational units in the United States yet.
Amazon has taken a different approach, leading a $500 million funding round for X-Energy, another company developing SMR technology. This investment highlights the tech sector’s growing interest in next-generation nuclear power solutions.
The renewed interest in nuclear energy comes at a time when the industry has been largely stagnant in the United States. According to the Energy Information Administration, the country’s 94 nuclear reactors have maintained a steady 20% share of total electricity generation since the late 1980s. The recent opening of two new reactors at the Vogtle plant in Georgia marked the first additions to the U.S. nuclear fleet in seven years.
Strict safety regulations and high costs have historically slowed nuclear power expansion. However, the tech industry’s urgent need for reliable, carbon-free electricity to power AI operations is changing the calculus. As Mike Laufer, CEO of Kairos Power, explained, SMRs aim to provide nuclear power generation at a lower cost and with greater flexibility than traditional large-scale reactors.
While these developments signal a potential renaissance for nuclear power, it’s important to note that many of these projects are years away from fruition.
The Three Mile Island reactor, despite using existing technology, isn’t expected to come online until 2028. SMR projects are even further out, with companies like Kairos targeting 2030 for their first demonstration units.
For investors looking to capitalize on this trend, options are limited and come with significant risks. Publicly traded companies in the nuclear sector have seen explosive growth this year, with NuScale Power’s stock surging over 450% and Oklo, backed by OpenAI’s Sam Altman, gaining more than 80% since its public debut in May.
The anticipated surge in electricity demand has also boosted utility company stocks to near-record levels. An ETF tracking S&P 500 utility companies has risen by almost 30% this year, potentially heading for a record annual gain.
Uranium producers have also benefited from the renewed interest in nuclear power. Companies like Uranium Energy and Cameco have seen their stock prices climb to multi-year highs as investors bet on increased demand for nuclear fuel.
George Gianarikas, an analyst at Canaccord Genuity covering renewable energy, emphasized that SMRs remain unproven technology.
“We don’t have a lot of examples of small modular reactors working in the world. They’re a promise,” he stated.
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