Almost a month ago I wrote about the opportunity that two of the hottest names in nuclear energy were providing investors.
Shares of Nano Nuclear (NNE) and NuScale Power (SMR) are trading higher by 65% and 95% receptively over the last six months.
AI takes massive amounts of energy to do even the simplest of tasks. Those billions and billions of calculations are now taking a bite out of the energy grids all around the world.
According to the International Energy Agency (IEA), data centers around the world currently account for 1.5% of the world’s total energy use. To put that into perspective, the continent of Africa uses 1%-6% of the world’s energy.
Furthermore, Wells Fargo has projected that AI power demand will increase 550% by 2026 and another 1,150% by 2030.
This is a problem, a very big problem.
Two companies at the hearts of the Nuclear AI movement are Nano Nuclear Energy (NNE) and NuScale Power (SMR).
Both stocks have seen weakness in their price activity over the last few weeks as investors appear to be taking short-term profits from both stocks.
Over the last month, |Shares of NuScale have dropped 35% while Nano Nuclear Stock has has dropped 22%.
Some investors may look at these drops as a disappointment, though the truth is that this is likely a great “buy the dip” opportunity.
To say that both of these stocks needed a technical break, or a “Healthy Correction” is an understatement. Now, investors are just waiting for volume to come back to the market to drive prices higher.
Of the two stocks, shares of Nano Nuclear (NNE) are in the stronger position.
After their 30%+ decline, the stock remains above its 50-day moving average. This is one of the most important trendlines for any stock as it represents whether the “trend” is friendly for a stock or not.
In this case, Nano Nuclear’s 50-day moving average is sitting just above $22.50. That price has offered support for the stock several times over the last two weeks, signaling the trendline’s strength.
Volume has been light, adding to the volatility of Nano Nuclear’s price, but shares have been edging closer to the $27.50 price.
A break above this price will trigger the next surge of buying for Nano Nuclear stock, targeting a move to $35 or $40.
NuScale Power’s chart is a little more distressed, but still bullish.
Over the last month, shares have dropped from $32.50 to their current price of $20. The move has been on consistent volume, indicating that the stock is not changing hands from buyers to sellers with any urgency.
The drop in price has been on little to no news, suggesting that the stock has experienced a short-term correction that will reset prices for another move higher.
Initially, it appeared that NuScale shares would rebound from the $22.50 and $25 price levels. That not being the case, investors should eye support at $20 closely.
While the stock’s 50-day moving average remains in a bullish trend, NuScale’s 20-day trendline – also called the “Trader’s Trendline” is currently in a bearish trend.
Ideally, the stock will challenge to move above both the 20- and 50-day moving averages in the early days of 2025, which would signal a 4-6 week buying opportunity as the stock recovers.
A move back above $25 after a short test of $22.50 will signal that the stock is ready to advance back to its highs as investors jump on the opportunity to buy the stock after its recent dip.
The market is embracing the idea of nuclear-powered AI, note that I said “the market”
We’re seeing a heavy increase in interest in reviving the nuclear energy industry, but this is a movement that will take years to just get through regulatory review and approval.
Microsoft’s announcement a few months ago to partner with Constellation Energy (CEG) resulted in a 30% rally over the following two weeks. That plan includes restarting one of the facilities at the storied Three Mile Island site.
But the market is clearly favoring the approach of companies partnering with small modular reactor developers as the real future of the industry.
The road will be longer in terms of fully developing products specifically for the AI industry and data centers, along with their approval. But the possibility opens much wider in the market after that point.
Investors that are looking at the “horizon” see SMR technology that can be dropped in data centers as needed, where needed.
Both Nano Nuclear and NuScale will see a new round of buying interest hit the shares as soon as they exhibit signs that the short-term correction has finished.
For Nano Nuclear, a move above $27.50 will signal that the stock is set for its next 20-30% rally higher.
For shares of NuScale, a move above $22.00 will indicate that the stock’s next rally is leaving the station. Expect to see investors start buying shares quickly as the stock heads towards its next target of $35 or $40.
