The AI Revolution's Next Phase Isn't Possible Without "Einstein's Blueprint"

Two headlines this morning point out a problem that both you and I know had to be fixed, fast.

As is usually the case, there’s an investment opportunity associated with the solution.

This morning’s news headlines are the beginning of a trend that is going to boost a small group of companies, a group that you can hold with one investment.

I’ll get to the investment in a minute, first the background on the problem.

CNBC reported this morning that Google (GOOGL) will be investing with Blackrock to work with a solar developer in Taiwan.  The partnership’s goal is to develop 1 gigawatt pipeline of solar capacity in Taiwan. The article is here.

Also. in the news this morning, the Wall Street Journal reports that the “Tech Industry Wants to Lock Up Nuclear Power for AI”.

The story identifies companies like Amazon Web Services and other AI companies look to get direct deals with power companies to provide enough power to run the massive – and still growing – data centers that serve as the backbone for all things artificial intelligence.

Electric vehicles (EVs) and artificial intelligence (AI) are both experiencing rapid growth. The growth is increasing global energy demands.

Here's the problem and the opportunity

As of 2020, EVs consumed approximately 90 terawatt-hours (TWh) of electricity, a figure projected to rise three-fold by 2030 with EV adoption by 2030.

This surge could potentially increase their energy consumption to several hundred TWh annually.

AI's energy consumption is growing parabolically Data centers, crucial for training and running AI models, consumed about 200 Terawatts globally in 2020.

Training large AI models is particularly energy-intensive, sometimes equating to the annual electricity use of thousands of homes.

The growing energy requirements of both EVs and AI underscore the need for enhanced energy efficiency and the expansion of renewable energy sources.

There’s one power source that’s staging a comeback to meet that surging demand...

Nuclear

Known for its clean energy benefits, nuclear power is said to be one of the most efficient means for power generation.

The average capacity for a nuclear power plant is around 90%, making it the most reliable base load power source.

From a cost comparison, nuclear power’s energy return on energy invested (EROEI) is more favorable than other forms of electricity, meaning the energy to mine uranium for nuclear results in a return of more energy than other power generation processes.

Of course, nuclear energy isn’t without its faults, mostly a social stigma at this point.

The U.S. currently has 92 operational reactors in 28 states.  That number doubles in Europe.

Since the 1980s, the U.S. dialed back interest in nuclear power after the accident at Three Mile Island.

But Artificial Intelligence and Electric Vehicles may have the power to shift public opinion.

Albert Einstein's groundbreaking equation,  E = mc^2, revealed the immense potential of nuclear energy, highlighting how a small amount of mass can be converted into a vast amount of energy. This foundational discovery has paved the way for modern nuclear power.

There are plenty of companies already in the nuclear production business.  Companies like Constellation Energy Group (CEG), Southern Company (SO), and others are already established publicly traded nuclear providers.

Add to these – and other international nuclear power generators – several uranium miners and you’ve got the one investment that can benefit from AI and EV’s Power Problem.

The VanEck Uranium and Nuclear ETF (NLR) mimics the performance of companies engaged in uranium mining or projects expected to substantially impact their revenue or assets, as well as those involved in nuclear facility construction, maintenance, nuclear power production, and supplying equipment or services to the nuclear industry.

The exchange-traded fund is trading 13% higher year-to-date with one-year returns of 42%.

NLR Price Chart

Shares of the VanEck Uranium and Nuclear ETF shifted into a new long-term bull market trend in 2023 after a long-term consolidation in the nuclear industry.  Renewed interest in nuclear energy as an alternative to traditional power generation.

The trend, while parabolic of late, is only in its infancy as regulators and energy companies are likely to move fats to adopt updated standards to allow for more nuclear power generation over the next 5-10 years.

In addition, a wave of new technology nuclear companies are working on smaller nuclear power solutions that may reduce the stigma of nuclear power’s dangers.

Companies like Rolls Royce (OTCMKTS: RYCEY), Westinghouse, Terra Power and Nano Nuclear (NNE) are just a few of the companies working on Small Modular Reactor technology (SMR), that may lead the way to even more efficient uses of nuclear to address our surging need for energy to power new technologies.

For now, the all-in-one approach of using the VanEck Uranium and Nuclear ETF (NLR) may be the easiest and most diversified wat to invest in the resurgence of nuclear power.