Nuclear Energy Stock Prices Skyrocket Amid Tech Giants’ Groundbreaking Deals
This week witnessed an exhilarating leap in the stock market, particularly for nuclear energy companies, as share prices soared to unprecedented heights. The catalyst? Amazon and Google’s groundbreaking power supply agreements, which turbocharge ambitions to install the first small modular reactors (SMRs) on American soil.
In a stunning display of investor enthusiasm, the shares of U.S.-listed SMR innovators Oklo Inc and NuScale Power skyrocketed by 99% and a hefty 37%, respectively, within just a week. The ripple effect extended to competitors X-energy and Kairos Power, both of which recently unveiled significant financing agreements. Consequently, stocks in Cameco, Oklo, NuScale, Constellation, and BWX Technologies all experienced record-breaking trading figures throughout the week.
These pivotal agreements are poised to propel the development of nearly a dozen pioneering reactors, envisioned to provide low-carbon electricity to satisfy the immense energy needs of Amazon and Google’s growing legion of AI-driven data centers.
In the eyes of investors, this renewed vigor suggests a nuclear renaissance is taking shape, a sharp contrast to the industry’s gloom following the harrowing events at Fukushima in 2011.
A surge in data centers is propelling an unrelenting escalation in U.S. power demands, effectively undermining efforts to diminish dependence on fossil fuels and further the journey toward decarbonization.
The stock of Constellation Energy Group, boasting the largest conventional reactor fleet in the U.S., has more than doubled since the year commenced. Recently, Constellation inked a game-changing 20-year power supply deal with Microsoft, heralding plans to reactivate the notorious Three Mile Island nuclear facility in Pennsylvania—the site of America’s most significant nuclear disaster that once witnessed a partial reactor meltdown.
Furthermore, uranium producer Cameco has seen its shares surge by 38% this year, while nuclear components supplier BWX Technologies revels in a robust 65% increase in stock value.
According to Seth Grae, the CEO of Lightbridge Corporation and chair of the American Nuclear Society’s International Council, the prevailing sentiment was that reactor companies had long foretold their necessity to meet the burgeoning power demands of AI yet faced skepticism. “These substantial investments illustrate a clear message: the tech industry recognizes that renewables and batteries alone cannot deliver the stable, cost-effective power required; nuclear energy is indispensable,” he asserted.
Until recently, investors treaded cautiously, hesitating to financially support the rollout of smaller reactor models, touted by advocates as inherently safer and more efficient than traditional nuclear options. Lingering doubts about the industry’s history of project delays and budget overruns, coupled with high interest rates and a dearth of willing purchasers for electricity, had hampered advancement.
Last year, the market turbulence forced X-Energy to retract a much-anticipated $1.8 billion public offer via a special purpose acquisition company (SPAC). Soon thereafter, NuScale abandoned its plans for the inaugural small reactor in the U.S. due to insufficient interest from power utilities, as its price surged over 50% to $89 per megawatt hour.
Marc Bianchi, an analyst at TD Cowen, noted that the conundrum for the small reactor industry was a reluctance among potential customers to commit to “reactor number one,” which is often more costly and fraught with risk compared to subsequent models.
The recent decisions by Amazon and Google to invest in small reactor technology underscore an urgent necessity for durable, affordable, and environmentally friendly electricity to fuel a new era of AI data centers. A recent report from Wood Mackenzie highlighted that in the first half of 2024, companies announced new data centers boasting nearly 24 GW of capacity—more than tripling the announcements from the same timeframe last year.
“It transcends merely replacing existing fossil fuel generation; we must expand our infrastructure immediately. This has ignited a real sense of urgency,” expressed Mike Laufer, founder and CEO of Kairos Power, which signed a contract with Google for the deployment of six to seven small reactors by 2035.
Additionally, the industry stands to gain from a substantial financial influx from the U.S. government, wary of allowing Russia and China—both of which have successfully deployed small reactors—to dominate the nuclear landscape. Washington is keenly aware of the critical need for a stable power grid to safeguard its leadership in AI technologies without exacerbating emissions.
“The sole limitation to U.S. dominance in artificial intelligence resides in our power capabilities. It’s neither land nor semiconductors; it’s all about power. Thus, ensuring a consistent energy supply is our foremost objective,” declared Clay Sell, CEO of X-Energy.
Yet, while this week’s fervor surrounding nuclear energy, particularly small reactors, is palpable, it obscures significant risks associated with the deployment of emerging technology historically plagued by delays and financial overruns, critics warn.
Edwin Lyman, director of nuclear power safety at the Union of Concerned Scientists, cautioned that X-energy’s and Kairos’ SMRs remain “untested designs,” likely to face lengthy deployment timelines extending beyond their projected deadlines of 2030 and beyond. “The road to achieving safe, commercially viable operations for any experimental nuclear framework is bound to be fraught with challenges, making it nearly impossible to predict final power costs,” he stated.
The pathway ahead remains littered with stringent regulatory standards and challenges, as developers of alternative energy sources contend. “The euphoria surrounding these developments may be somewhat exaggerated,” assessed Andres Gluski, CEO of AES, the largest corporate renewables developer, which has entered into power purchase agreements totaling 5.8 GW with tech behemoths like Google, Microsoft, and Amazon.
Data from the Lawrence Berkeley National Laboratory reveals that solar, wind, and battery storage constitute a staggering 95% of all capacity currently waiting to connect to the grid, while nuclear accounts for less than 1%. Alarmingly, no small reactor projects have reached the construction phase in the U.S., and over 80% of announced capacity has yet to transition into the development pipeline, according to Wood Mackenzie.
Nevertheless, developers of small reactor technology remain optimistic, asserting that the endorsement from tech giants could be the pivotal shift they require. “The tech sector is increasingly recognizing the value not just in carbon-free power, but in the reliability and availability that nuclear energy can offer,” stated Clayton Scott, chief commercial officer at NuScale. “Momentum is unmistakably building.”