The rise of artificial intelligence (AI) has led many companies to urgently reassess their energy strategies. These companies, along with several countries, have also committed to reducing their carbon emissions to help slow climate change. Relying solely on renewable sources is currently not enough to meet these growing (and competing) needs.
Last year, several countries approved the Declaration to triple nuclear energy to meet this growing energy demand, by committing to triple their nuclear energy capacity by 2050. This initiative has garnered the support of major financial institutions like Bank of America And Goldman Sachshighlighting the central role of nuclear energy in meeting our future clean energy needs.
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With global demand for nuclear power expected to grow in the long term, here are three stocks to watch in this evolving landscape.
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As cutting-edge AI models advance, the power requirements of power-hungry data centers have increased. Data center electricity demand is expected to grow about 15% annually through 2030 and could ultimately account for about 8% of total U.S. electricity demand, according to a Goldman Sachs study.
To meet these growing needs, tech giants are forging partnerships with nuclear power providers, marking a significant shift in the way we think about energy consumption in the tech industry. Last month, Microsoft made headlines by signing a 20-year power purchase agreement with Constellation Energy (NASDAQ:CEG)which includes the prospect of restarting Three Mile Island Unit 1.
The constellation is one of the largest clean energy producers in the United States, generating a capacity of 32,400 megawatts, of which 86% of its production comes from nuclear power. The company provides about 10% of the country's clean energy and 90% of its energy is carbon-free.
With growing demand for carbon-free nuclear power, Constellation Energy is a solid stock to own to capitalize on these trends.
Caméco(NYSE:CCJ) is one of the largest publicly traded companies in the uranium industry and has significant mining operations in Saskatchewan and the United States. It also holds a 40% stake in a joint venture with Kazatomprom in Kazakhstan and a 49% stake in Westinghouse Electric with Brookfield Renewable Partnersstrengthening its position in nuclear services.
In Canada, Cameco operates two uranium mines at Cigar Lake and McArthur River in Saskatchewan while also operating one of the world's largest commercial refineries in Ontario. The company is expected to produce 23.1 million pounds of uranium this year.
It is well positioned to meet robust demand, as supply remains constrained due to underinvestment in development and exploration, as well as the recent U.S. ban on Russian uranium imports.
Although there are no immediate plans to build new reactors in the United States, significant efforts are being made to increase nuclear power production, including improving the capacity of existing plants, extending their lifespan operational and even by putting decommissioned nuclear installations back into service.
Forecast of Citi Group suggest that uranium prices could average around $110 a pound next year, up from around $77 currently, due to growing demand outpacing supply. In the longer term, the International Atomic Energy Agency (IAEA) projects that nuclear capacity could increase 2.5 times from current levels by 2050. As one of the largest suppliers of uranium in the world, the growing demand should be a favorable factor for Cameco's mining operations.
One of the most promising developments in nuclear energy concerns small modular reactors (SMRs). This innovative technology offers a modular and scalable approach to nuclear power, making it an ideal choice for meeting the energy needs of remote areas or high-demand industrial facilities and data centers.
From now on, NuScale Power(NYSE:SMR) is the only company to have received standard design approval from the United States Nuclear Regulatory Commission for its 50-megawatt SMR.
The SMR design would allow prefabrication in a factory, with components then transported for assembly at the project site. This streamlined process could potentially reduce the costs and time needed to commission these reactors, which is why they have attracted the attention of technology companies and investors.
However, recent experiments have shown the obstacles that this technology still needs to overcome. For example, the Utah Associated Municipal Power System (UAMPS) recently terminated a 2015 agreement with NuScale due to delays and increased expenses, highlighting the complexities involved.
Although NuScale is at the forefront of an exciting technological revolution in nuclear energy, it is important to note that deployment of SMR technology will still take years. The company recently partnered with Standard Power to establish two facilities in Ohio and Pennsylvania using its SMR technology. They could be operational by 2029 if everything goes according to plan.
For now, NuScale will be driven by investor sentiment toward its accomplishments and the broader narrative surrounding the future of nuclear power. That said, the exciting technology makes this title worthy of a spot on your watchlist as it evolves and develops over the next few years.
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Citigroup is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Courtney Carlsen holds positions in Cameco and Microsoft. The Motley Fool holds positions and recommends Bank of America, Goldman Sachs Group and Microsoft. The Motley Fool recommends Brookfield Renewable Partners, Cameco, Constellation Energy and NuScale Power and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Mad Motley has a disclosure policy.
