Amazon and Google support the signing of power purchase agreement, U.S. nuclear energy stocks rise to new highs

With major tech companies like Amazon and Google entering into agreements for nuclear energy supply, the market saw a significant surge in U.S. nuclear stocks last week, reaching historic highs. Experts are optimistic that these stocks will continue their upward trajectory.

According to the Financial Times, Amazon and Google have signed agreements with private small modular reactor (SMR) developers X-Energy and Kairos Power to meet the electricity demands of their artificial intelligence (AI) data centers. These announcements led to a staggering 99% increase in the stock price of Oklo, a company listed in the U.S. focused on similar technology.

NuScale Power also experienced a notable 37% rise in its stock price, joining other players like Cameco, Constellation Energy, and BWX Technologies in reaching historic highs.

Investors believe that the burgeoning demand for electricity driven by AI data center constructions is a game-changer for the nuclear industry. The agreements announced by Amazon and Google serve as evidence that nuclear power is making a comeback after the slump that followed the Fukushima disaster in Japan in 2011.

Constellation, the operator of the most traditional nuclear reactors in the U.S., has seen its stock price more than double since the beginning of the year. In September, the company entered into a 20-year power supply agreement with Microsoft, which includes plans to restart the Three Mile Island nuclear plant, a site previously associated with a severe nuclear accident.

Cameco, a uranium producer, has experienced a 38% increase in its stock price this year, while BWX Technologies, a supplier of nuclear components, has surged by 65%.

Lightbridge Corporation’s CEO, Dan Gill, commented that U.S. nuclear operators have consistently stated the need for nuclear power to meet the electricity requirements of AI. “Yet it seems no one believed it,” he said, adding that the significant investments in nuclear by tech companies indicate a growing consensus that renewable energy and battery storage alone cannot provide stable and cost-effective power solutions.

According to Wood Mackenzie, companies have announced data center projects this year that will require nearly 24 gigawatts (GW) of electricity, more than doubling the demand from the same period last year.

The nuclear industry is also benefiting from billions of dollars in investments from the U.S. government. Officials are concerned that Russia and China, which have already deployed small nuclear reactors, could become unchallenged leaders in the industry. They recognize that ensuring the construction of a stable energy supply is crucial for maintaining the U.S.’s leadership in AI without increasing carbon emissions.

MarketWatch columnist Andrew Foster believes that with tech giants relying on nuclear energy, the previously surging stock prices of uranium and utility companies are likely to continue rising. He draws attention to the “nuclear revival stocks,” which encompass power generation suppliers, infrastructure developers, and uranium producers.