How to Invest in Nuclear Energy’s Biggest Revival in Decades
Nuclear energy is undergoing a major revival, capturing the attention of investors and policymakers alike. In recent years, the sector has seen unprecedented growth, with global investment in nuclear power accelerating at a compound annual growth rate of 14%—a significant leap from the 1% rate seen before 2020. This surge is driven less by environmental concerns and more by the explosive power demands of artificial intelligence and data centers, which are reshaping the global economy. Data centers alone accounted for about 4.4% of total U.S. electricity consumption in 2023, a figure projected to nearly triple to 12% by 2028. Major technology companies are responding to these demands by securing long-term nuclear power purchase agreements. Companies like Meta, Amazon, Alphabet, and Microsoft are not just making sustainability pledges; they are making strategic moves to secure the reliable, around-the-clock energy necessary to fuel their AI ambitions.
The policy landscape has also shifted in favor of nuclear energy. Government support has increased, with executive orders aimed at boosting domestic uranium production and enrichment. This has created a favorable environment for both established players and new entrants in the nuclear sector. Investors looking to gain exposure to nuclear energy have several options. Direct exposure can be found through uranium miners such as Cameco, which is the world’s second-largest uranium producer and also holds a significant stake in Westinghouse, a major reactor construction firm. Utilities like Constellation Energy offer another avenue, benefiting from their ability to respond more flexibly to rising electricity prices and growing demand compared to rate-regulated utilities. For those seeking broader diversification, exchange-traded funds such as the Global X Uranium ETF and the Sprott Uranium Miners ETF provide exposure to a wide range of uranium producers, nuclear component manufacturers, and service providers.
Innovation in the sector is also accelerating, particularly with the development of small modular reactors (SMRs). Over 80 SMR designs are currently in development, promising faster deployment and lower costs than traditional large-scale nuclear plants. NuScale Power stands out as the only company with SMRs certified by the U.S. Nuclear Regulatory Commission, giving it a significant first-mover advantage. Oklo, another key player backed by high-profile investors, aims to bring its first reactor online by 2027. These advancements could make nuclear energy more accessible and cost-competitive with other forms of power generation.
Despite its promise, nuclear investing comes with considerable risks. Construction and development risks are especially high, with nuclear projects historically experiencing average cost overruns of over 100%. The supply chain for uranium is highly concentrated, with Kazakhstan alone accounting for 43% of global production, and enrichment capacities are limited to just a handful of suppliers. Political support, while currently strong, can be unpredictable, and regulatory hurdles remain significant. These factors mean that while traditional utilities offer more stable exposure, uranium miners provide commodity-linked returns, and SMR developers represent a higher risk-reward opportunity for investors willing to navigate the uncertainties.
Nuclear energy stands at the intersection of technological innovation, shifting energy demands, and evolving policy. As the world grapples with the dual challenges of powering the digital economy and reducing carbon emissions, nuclear power is poised to play a critical role in the energy landscape of the future.