Nuclear power stocks were on fire this week as nuclear power news became a hot topic again. The energy requirements for artificial intelligence data centers are so astronomical that not only new factories are being planned, but old factories are also being restarted.
According to data from S&P Global Market Intelligence: Uranium Energy (NYSEMKT:UEC) rose by no less than 17.1%, Cameco (NYSE: CCJ) increased by 9.6%, and NuScale power (NYSE: SMR) rose 15% this week. The companies’ shares are up 14.8%, 8% and 15% in the week as of 1:00 PM ET on Friday.
Big tech falls in love with nuclear energy
At the end of last week, Constellation Energy announced that it had entered into a long-term power purchase agreement Microsoft to sell 100% of Three Mile Island’s Unit 1 electricity in the coming years. Microsoft will use the electricity to power data centers within the PJM area, part of the US East Coast electrical grid
This followed comments from Oracle CEO Larry Ellison said earlier this month that his company is planning a data center linked to three small nuclear reactors.
The consensus is that nuclear energy will play a major role in future energy needs for artificial intelligence. In theory, that should be good for nuclear energy stocks.
The timing is not favorable
As much as there is hype about nuclear energy this week, it takes years and sometimes decades for a nuclear power plant to be completed. Three Mile Island operated for decades before closing in 2019, and it won’t be until at least 2028 before the plant reopens.
Small modular nuclear reactors have been the ‘next big thing’ in nuclear energy for a decade, but may not be operational until 2030 or beyond.
The market responds to the nuclear hype within days or weeks, but it will take another ten years before nuclear energy becomes a reality.
The uranium market tells a different story
The other factor for investors to consider is how uranium prices will be affected by an increase in demand. But there is also supply to take into account.
U.S. uranium production has tripled from a year ago, according to the U.S. Energy Information Administration. Even with restrictions on uranium imports from Russia, supply does not appear to be a problem for the industry.
Prices have responded negatively, falling more than 20% from their highs earlier this year. For uranium producers like Uranium Energy and Cameco, supply-demand dynamics and falling prices will hurt bottom lines.
The bright future of nuclear energy lies far in the distance
It’s easy to get excited about the future of nuclear energy, given the recent nuclear deals and the hype surrounding artificial intelligence. But keep in mind the market’s reaction this week versus the operational realities these companies face.
It will be many years before there is any kind of windfall, and even then it may not be as large as expected if uranium mining picks up or the costs of the plants turn out to be higher than expected. For that reason, I think the recent hype will soon die down.
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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Constellation Energy, Microsoft, and Oracle. The Motley Fool recommends Cameco and NuScale Power and recommends the following options: long calls in January 2026 for $395 at Microsoft and short calls in January 2026 for $405 at Microsoft. The Motley Fool has a disclosure policy.
The truth behind the nuclear power stocks popping this week was originally published by The Motley Fool
