Top Three Nuclear Shares to Invest in During January
In the wake of 2023, artificial intelligence (AI) exploded onto the global stage, igniting a frenzy in the stock market. Venture capitalists, tech giants, and everyday investors alike flocked to corporations championing AI technology, chip production, cloud services, and software applications. However, an overlooked challenge loomed on the horizon - the staggering amount of electricity required to fuel this burgeoning industry.
Recent projections by Wells Fargo foretold AI's electricity consumption skyrocketing from 8 terawatt-hours in 2024 to a jaw-dropping 652 terawatt-hours by 2030. This escalating energy demand raises critical questions regarding energy sources and their environmental impact. Enter the potential savior - nuclear energy.
Given its efficiency, low carbon footprint, and ability to provide base load power, nuclear power may be the answer to this energy quandary. The long-term energy requirements associated with AI growth present a lucrative opportunity for companies tied to the nuclear energy sector. Here are three top nuclear stocks to consider investing in during January 2023.
1. Cameco
Cameco, a leading uranium producer, finds itself at the epicenter of AI's energy needs. The Canadian company controls an impressive 18% of the world's uranium supply, with significant mining interests in Canada, the United States, and Kazakhstan. With AI's escalating prominence, Cameco appears poised for an extended period of growth.
Meta Platforms recently pledged its intention to source nuclear energy for AI data center operations, starting in the early 2030s. As more tech companies and countries embrace nuclear power as a leg up in the race to reduce carbon emissions, Cameco's fortunes may be set to shine.
Analysts expect Cameco to chalk up revenue of $2.3 billion by 2025, signaling the early stages of a potential multi-decade growth trajectory. As long as governments and organizations remain committed to advancing nuclear energy, Cameco's growth story may be just getting started.
2. Southern Company
For those looking for a nuanced investment in the nuclear energy sector, Southern Company presents an intriguing alternative. Based in the United States, Southern Company offers a diverse portfolio that includes electricity generation and natural gas and electric utility services. The company's distributed energy sources include gas, coal, nuclear, and renewables, providing a reliable revenue stream.
Southern Company has recently dedicated significant resources to nuclear energy. Operating eight power units across three sites, Southern Company boasts the first newly constructed nuclear units in the United States for commercial operation in three decades. In March 2023, Microsoft and Constellation Energy secured a 20-year agreement to reactivate a nuclear power unit at the Three Mile Island Nuclear Station in Pennsylvania for data center power supply. Southern Company's proximity to Virginia, home to the country's data center powerhouse, opens up possibilities for similar partnerships.
Investors stand to gain from a 3.5% dividend yield, offering a steady income stream while they watch for AI-driven growth in Southern Company's long-term potential. Although the company's shares are not inexpensive, a P/E ratio of 20 times earnings offers a tolerable risk for long-term investors.
3. GE Vernova
Once synonymous with its beloved conglomerate, GE Vernova now stands as a nuclear powerhouse in its own right. GE Vernova's diverse clean energy portfolio includes power generation, grid electrification, and wind and gas turbines, with a distinct focus on nuclear.
As society gradually transitions from fossil fuels to cleaner energy alternatives, GE Vernova may capitalize on a multi-decade growth opportunity. With management forecasting high single-digit revenue growth through 2028 and investing $5 billion in research and development, GE Vernova's long-term growth potential is impossible to ignore.
However, the stock's 124 forward P/E ratio may leave some investors feeling wary. But with analysts predicting earnings growth averaging 46% per annum over the subsequent couple of years, the price tag attached to the stock makes sense. Timid investors can begin by testing the waters with a modest investment, with plans to strengthen their positions if share prices dip. Either way, GE Vernova's long-term prospects are difficult to dismiss in the face of surging electricity demand and the clean energy transition.
This article originally appeared at S&P Global Market Intelligence on June 7th, 2023, and has been updated to reflect a change in date for clarity purposes.
- The escalating energy demand for AI due to its electricity consumption has led to questions about energy sources and their environmental impact, opening a lucrative opportunity for companies in the nuclear energy sector by 2025.
- In light of AI's growing reliance on energy, Cameco, a leading uranium producer, may experience extended growth, as the company controls a significant portion of the world's uranium supply and is well-positioned to meet the demands of AI-driven electricity consumption.
- With AI-related energy consumption projected to skyrocket is 2030, investors looking for nuclear stock options may consider Southern Company, which boasts a diverse portfolio in electricity generation and natural gas services, and has recently dedicated resources to nuclear energy development.
- As the world transitions towards cleaner energy alternatives, GE Vernova, a nuclear powerhouse, could capitalize on this opportunity, as its diverse clean energy portfolio and significant investment in research and development position it for high single-digit revenue growth through 2028.
