The market is excited about nuclear energy again, but we may be a decade away from the payoff.
Nuclear energy stocks were on fire this week as nuclear energy news became a hot topic again. The energy demands for artificial intelligence data centers are so astronomical that not only are new plants being planned, but old plants are being restarted.
According to data provided by S&P Global Market Intelligence, Uranium Energy (UEC -2.51%) was up as much as 17.1%, Cameco (CCJ -0.67%) popped 9.6%, and NuScale Power (SMR 7.91%) was up 15% this week. Shares of the companies are up 14.8%, 8%, and 15% for the week as of 1 p.m. ET on Friday.
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Big tech falls in love with nuclear energy
Late last week, Constellation Energy announced it had agreed to a long-term power purchase agreement with Microsoft to sell 100% of the electricity from Three Mile Island’s Unit 1 for years to come. Microsoft will use the electricity to power data centers within the PJM area, a portion of the grid on the East Coast of the U.S.
This followed comments from Oracle CEO Larry Ellison earlier this month, who said his company is planning a data center that has three small nuclear reactors attached.
The consensus is that nuclear energy will play a big role in future energy needs for artificial intelligence. In theory, that should be good for nuclear energy stocks.
Timing isn’t favorable
As much as there’s hype about nuclear energy this week, a nuclear power plant takes years and sometimes decades to complete. Three Mile Island operated for decades before closing in 2019 and it will still take until at least 2028 to reopen the plant.
Small modular nuclear reactors have been the “next big thing” in nuclear energy for a decade, but they may not be operational until 2030 or after.
The market is reacting to nuclear hype in a matter of days and weeks, but nuclear energy will take a decade to become reality.
The uranium market tells a different story
The other factor for investors to consider is how uranium prices will be impacted by an increase in demand. But there’s also supply to consider.
According to the U.S. Energy Information Administration, U.S. production of uranium has tripled from a year ago. Even with restrictions on uranium imports from Russia, supply doesn’t appear to be a concern for the industry.
Prices have reacted negatively, falling more than 20% from their highs earlier this year. For uranium producers like Uranium Energy and Cameco, the supply/demand dynamic and falling prices will hurt the bottom line.
Nuclear energy’s bright future is far in the distance
It’s easy to get excited about the future of nuclear energy given the recent nuclear deals and hype around artificial intelligence. But keep in mind the market’s reaction this week versus the operational reality these companies face.
It will be many years before there’s any kind of windfall and even then it may not be as big as expected if uranium mining picks up or plant costs are higher than expected. For that reason, I think the recent hype will soon wear off.
Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Constellation Energy, Microsoft, and Oracle. The Motley Fool recommends Cameco and NuScale Power and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
