Shares of nuclear energy companies like Oklo (OKLO) and NuScale Power (SMR) surged by more than 90% and 25%, respectively, last week following landmark power supply agreements from tech giants like Amazon (AMZN) and Google (GOOGL). In addition, other small modular reactors (SMRs) companies in the U.S. such as Cameco (CCJ), Constellation Energy (CEG), and BWX Technologies (BWXT) saw their stocks hit new record highs last week.
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Let us look at in more detail what is behind the surge in nuclear energy stocks.
Tech Companies Are Increasingly Turning to Nuclear Energy as a Source of Power
Tech giants like Amazon and Google are increasingly looking at nuclear energy as a source of power for their data centers. This is because as the demand for AI accelerates, data centers are consuming unprecedented levels of energy. As a result, to meet this rising energy demand, tech companies are turning to nuclear power, which provides continuous, carbon-free electricity, unlike other renewable energy sources like wind and solar.
In fact, according to a Financial Times report, Seth Grae, CEO of Lightbridge Corp. stated that reactor companies have long argued they would play a critical role in meeting the AI-driven surge in power demand, but those claims were often met with skepticism. However, Grae added, “These large investments show the tech industry does not believe renewables and batteries alone can meet their needs. Nuclear will be essential.”
Tech Companies Entering into Deals with Nuclear Energy Companies
As a result, to meet this rising energy demand, Microsoft (MSFT) recently signed a 20-year power supply agreement with Constellation Energy. Constellation Energy operates the largest fleet of conventional reactors in the U.S.
Moreover, private nuclear energy developers, like X-energy and Kairos Power, have secured new financing agreements. Kairos Power has entered into a deal with Google to deploy up to seven SMRs by 2035.
Additionally, Amazon has announced plans to finance the construction of several small nuclear reactors in Washington state and invest in X-energy, a Maryland-based startup, which will develop additional SMRs.
Why Are Tech Companies Turning to SMRs?
Unlike traditional nuclear reactors, SMRs are designed to be smaller, modular, and more cost-efficient, producing about one-tenth the power of existing nuclear plants. Furthermore, the U.S. government is supporting the development of SMRs and recently committed $900 million in funding.
Are Nuclear Energy Stocks a Good Investment?
For investors interested in investing in nuclear energy stocks, we have rounded up nuclear energy stocks rated a Strong Buy or Moderate Buy by Wall Street analysts using the TipRanks Stock Comparison tool.
