"Golden Notes in the AI Era"! The explosion of nuclear power stocks in the US stock market, what investment opportunities are there?

According to Zhitong Finance APP, recently, U.S. nuclear power stocks have surged; the main reason is that the industry is benefiting from favorable policies and funding, highlighting that the nuclear energy sector has become one of the key directions for AI investment, and analysts are beginning to look forward to the optimistic prospects of this industry.

Nuclear Power Stocks Welcome Catalysts Again

On Tuesday, U.S. nuclear-related concept stocks rose sharply. Nine Energy Service (NINE.US) and Energy Fuels (UUUU.US) both rose over 14%, while Uranium Energy (UEC.US) increased by more than 11%. Meanwhile, the VanEck Uranium and Nuclear ETF (NLR.US) reached an all-time high. Popular nuclear power stocks such as Centrus Energy (LEU.US), Talen Energy (TLN.US), NuScale Power (SMR.US), and Oklo (OKLO.US) are all hovering near historical highs.

The latest news is that large technology companies are accelerating a series of transactions with the nuclear power industry. On Tuesday local time, the surge in electricity demand for running artificial intelligence prompted Meta Platforms (META.US) to sign a 20-year power purchase agreement with Constellation Energy (CEG.US), the largest nuclear power operator in the U.S.

This latest agreement reaffirms the enormous electricity demand from tech companies for data centers and AI computing. Nuclear energy is favored for its all-weather power supply characteristics and zero greenhouse gas emissions. The AI industry has brought explosive growth in electricity demand, and renewable energy can no longer meet the frenzied expansion of data centers; in this context, industry giants are turning to nuclear power.

In fact, this is not the first time tech companies have laid out plans in the nuclear energy sector. In March of this year, tech giants such as Amazon (AMZN.US), Google (GOOGL.US), and Meta Platforms signed a landmark commitment under the leadership of the World Nuclear Association, believing that by 2050, the global scale of nuclear power should reach at least three times the current level.

Tracing back to last year, tech companies had already signed nuclear energy agreements worth billions of dollars. Last year, Constellation received a $1.6 billion investment from Microsoft (MSFT.US) to restart the Three Mile Island nuclear power plant in Pennsylvania, and the two parties signed a 20-year power purchase agreement. In October of last year, Amazon Web Services announced cooperation agreements with three companies, with an initial investment of $500 million to develop small modular reactors. Google also signed an agreement last year with small modular reactor developer Kairos Power, which will build seven small modular nuclear reactors to power Google's data centers.

Among them, in nuclear power plants, the nuclear reactor is the core part, which is the device that obtains nuclear energy by controlling the nuclear fission chain reaction, and uranium metal is a crucial raw material in this process. According to the latest forecast from the World Nuclear Association, global uranium demand is expected to double by 2040 It is worth noting that on May 23, President Trump signed four executive orders aimed at accelerating nuclear power construction in the United States. The most notable goal is to achieve a nuclear power capacity of 400 gigawatts by 2050, which would quadruple the current operational capacity of 100 gigawatts in the U.S. Morgan Stanley believes that the goal of achieving 400 gigawatts of nuclear power capacity by 2050 highlights the Trump administration's policy shift in support of nuclear power, reinforcing the long-term demand outlook for uranium and maintaining a positive view on uranium prices for 2025.

Additionally, recent research indicates that if companies focused on uranium mining do not significantly ramp up new mining operations, the uranium market will soon face a severe supply shortage.

In February of this year, Kazakhstan, the world's largest uranium producer, has been gradually reducing sales to Europe and the United States, leading to a continuous decline in the supply available to Western countries. According to disclosures from Kazakhstan's state-owned mining group Kazatomprom, the company's overall sales share to the U.S., Canada, France, and the U.K. has dropped from 60% in 2021 to 28% in 2023. A Kazatomprom spokesperson stated that the company intends to maintain sales diversification and does not plan to "put all its eggs in one basket."

Goldman Sachs' research report points out that nuclear power is entering a golden decade, and the global uranium market is heading towards a structural shortage era, with a projected global uranium gap of 130 million pounds by 2040. Meanwhile, nuclear power demand is surging in the AI era, with a comprehensive outbreak of global nuclear power installations and a significant growth inflection point for nuclear technology.

Related Concept Stocks

The recent strong rise of nuclear power stocks in the U.S. stock market indicates that the traditionally unpopular field of nuclear energy among environmentally conscious investors is making a comeback. Many analysts are optimistic about related concept stocks in this recent wave.

First, nuclear power stock Oklo, backed by "ChatGPT father" Altman, has received favorable ratings from analysts. Wedbush Securities analyst Dan Ives recently raised Oklo's target price from $45 to $55, stating that Trump's actions have brought "significant benefits" to the industry, and Oklo is one of the main beneficiaries, as support from the U.S. government has shown significant results since the Trump administration took office a few months ago. The analyst also mentioned that stocks related to nuclear energy, such as NuScale Power, Lightbridge (LTBR.US), Energy Fuels, Cameco (CCJ.US), Uranium Energy, and Centrus Energy, are "also other beneficiaries."

Secondly, BMO Capital has initiated coverage on Uranium Energy with an "Outperform" rating and a target price of $7.75. The firm noted that the company focuses on a portfolio of assets in North America and is expected to become an important domestic uranium producer in the context of rising uranium prices. Uranium Energy has a substantial portfolio of past production, licensed, and developing assets. Its in-situ recovery assets in the U.S. form the basis for recent growth, and the company is expected to achieve its first product deliveries in the short term through its recently restarted Wyoming-based facility BMO analysts expect the company to achieve approximately 1.1 million pounds of uranium oxide production in fiscal year 2026, and to see an increase of nearly 6 million pounds per year through its other "hubs and branches" projects in the U.S. before fiscal year 2030, making it the largest uranium producer in the United States.

BMO analysts added that in the U.S., there is an increasing emphasis on energy security, and legislation supporting nuclear energy is also gaining momentum. Therefore, the company's ISR project pipeline in the U.S. could become an important force in meeting future domestic demand.

Goldman Sachs pointed out that "the energy demand for artificial intelligence data centers and national defense could be the golden ticket for nuclear energy." Among them, Cameco dominates the uranium sector, and Goldman Sachs has given the company a "buy" rating with a target price of $65. The new executive order aims to improve regulatory processes and strengthen the industry's supply chain. Reports indicate that this executive order is expected to address the U.S. reliance on uranium resources imported from China and Russia under the Defense Production Act. The order may streamline the approval and siting processes for new nuclear power plants and instruct the Department of Energy and the Department of Defense to identify federal lands suitable for nuclear facility deployment. This move aims to accelerate the construction process of nuclear power facilities. The order also encourages the use of the Loan Programs Office to provide loan guarantees and direct loans to expand the nation's nuclear energy production capacity. Goldman Sachs analysts believe that Cameco, as a uranium mining producer, will benefit from this initiative; the expected increase in nuclear power capacity will raise demand for physical uranium and conversion services