Nuclear energy and uranium recently experienced a notable surge, though questions remain regarding the long lead times involved in expanding nuclear energy production.
This week, nuclear energy stocks garnered significant attention as political forces advocated for increased nuclear production, and tech companies expressed interest in becoming buyers. Data from S&P Global Market Intelligence showed that Uranium Energy Corp. (UEC) surged by as much as 26.1%, Cameco Corp. (CCJ) rose by 11.1%, American Superconductor (AMSC) increased by 23.5%, and NuScale Power (SMR) achieved the most substantial gain, climbing 44.1% within the week. As of 1:30 p.m. ET on Friday, these stocks were trading up 20%, 8.5%, 19.3%, and 37.1%, respectively.
The political landscape played a critical role this week. Both presidential candidates expressed strong support for domestic energy production in the U.S., specifically endorsing nuclear power. Nuclear energy is appealing to policymakers for several reasons: it is a domestic energy source that could reduce reliance on foreign oil, and it is a clean energy source. However, the development of nuclear plants faces challenges due to public resistance to living near such facilities.
In the tech sector, Oracle’s CEO Larry Ellison revealed that the company is constructing a data center powered by three small nuclear reactors. Despite not disclosing the location, Ellison mentioned that building permits are secured. The timeline for operational small nuclear reactors remains unclear, as they are not expected to be commercially available until the 2030s. Nevertheless, this announcement stirred market optimism regarding tech’s increasing energy demands.
Further intensifying the situation, Russian President Vladimir Putin announced potential export restrictions on uranium, titanium, and nickel in response to Western sanctions. The United States, being one of the largest uranium importers, may see increased demand for domestic suppliers like Cameco and Uranium Energy.
While there is evident momentum behind the nuclear industry, the conversion of this momentum into revenue remains a prolonged process. Uranium suppliers such as Uranium Energy and Cameco stand to benefit if Russia restricts exports and uranium prices rise, but this trend could reverse as supply chains adapt.
New data centers might eventually utilize American Superconductor’s efficient transmission technology or NuScale Power’s small modular reactors, yet the actual implementation of these projects is expected to take years, if not decades. Hence, projecting a financial turnaround at this stage remains speculative.
The outlook for nuclear power in the U.S. appears promising, though these stocks remain speculative investments for now. Future developments will warrant close observation.
The author Travis Hoium holds no positions in any mentioned stocks. The Motley Fool has positions in and recommends Oracle and suggests Cameco and NuScale Power. Further details are available in The Motley Fool’s disclosure policy.
