Major technology companies such as Amazon, Google, and Oracle are aggressively expanding into nuclear power, sparking significant investor interest in the sector’s stocks and ETFs. However, concerns are emerging about potential ‘pump and dump’ schemes in the rapidly growing space.
Small modular reactors (SMRs) are at the heart of this nuclear push. Last week, Amazon made headlines with a 500 million dollar investment in three companies: Dominion Energy, X-energy, and Energy Northwest. The investment is aimed at powering Amazon’s data centers, which are critical for its AI-driven growth.
Similarly, Oracle co-founder Larry Ellison has announced plans for a gigawatt-scale data center powered exclusively by nuclear energy. Google, too, is embracing nuclear energy through a partnership with Kairos Power, which aims to have its first SMR operational by 2030.
“Traditional nuclear plants are expensive, take years to build, and are designed for large-scale energy distribution through the national power grid,” explained Dimitrii Ponomarev, ETF product manager at VanEck. “SMRs present a compelling alternative—they are smaller, more cost-effective, and can be transported directly to the site.”
Investor frenzy
Investor enthusiasm for nuclear energy is on the rise. Santa Clara-based Oklo Inc., a major player in advanced nuclear technology, saw its share price soar by 200 percent last month, with half of the gains made just last week.
But not everyone is convinced of the market’s long-term viability. Roderick van Zuylen, founder of Night Watch Investment Management, acknowledges SMR’s potential but warns that translating this into stock market success could be more complex than it appears.
“The nuclear story resonates with investors, but that also attracts bad actors and stock promoters,” Van Zuylen cautioned. “Stock promoters will go to great lengths to sell investors on a clean energy future, often pointing to the high-profile backers these companies have secured. In reality, many of these firms are underfunded startups, still years from commercialization. Insiders will likely cash out long before these ventures prove viable, leaving retail investors to shoulder the losses.”
Several nuclear-related stocks have experienced a surge this year. NuScale Power Corp., trading under the symbol “SMR,” saw its stock rise 40 percent last week, marking a staggering 541 percent increase year-to-date. Nano Nuclear Energy also surged over 400 percent this year, despite a lack of revenue. These dramatic gains underscore the speculative nature of the sector.
Growing energy demand in tech
The driver behind this surge is clear: AI’s insatiable hunger for power. The operational energy required by AI systems like ChatGPT has drastically increased data processing demands for large tech companies.
According to the World Nuclear Association, global nuclear capacity is expected to rise from 391 gigawatts in mid-2023 to 686 gigawatts by 2040. Analysts predict uranium demand will grow by 28 percent by 2030, nearly doubling by 2040, as countries expand nuclear power to meet zero-carbon targets.
“This growth scale makes nuclear energy perhaps the only viable source capable of meeting such immense demands,” Ponomarev said. “Its capacity to generate substantial amounts of power efficiently makes it uniquely suited to address the challenges of our energy-hungry world.”
The VanEck Uranium and Nuclear Technologies Ucits ETF saw a 30 percent increase in the past month. The standout performer in the U.S. stock market this year has been the Texan energy company Vistra Corp with a staggering 237 percent increase in its stock value, making it the top performer in the S&P 500 for 2024, even outpacing tech giant Nvidia.
Sustainability and nuclear’s role
Nuclear power’s low emissions profile is positioning it as a key player in the shift toward sustainable energy. In Europe, nuclear energy is increasingly considered an essential component of the clean energy mix. Switzerland, for example, has moved from rejecting nuclear energy in 2017 to endorsing new nuclear construction this year.
This trend is echoed globally, with countries such as Japan, the US, and the UK moving away from coal toward nuclear as a solution for future energy needs. “It’s not ‘green’ per se, but it’s cleaner, and that’s a vital distinction for companies seeking reliable and sustainable energy sources,” Ponomarev said.
Challenges in scaling
Despite the optimism, there are challenges. Recent cost overruns in constructing conventional nuclear plants like the Vogtle expansion in Georgia and the Summer plant in South Carolina highlight the risks. Westinghouse, the contractor for both projects, went bankrupt in 2017, nearly bringing its parent company, Toshiba, to financial ruin.
“Strict environmental and safety regulations in anything involving nuclear energy mean everything tends to be more expensive than initially thought,” Van Zuylen pointed out.