Wall Street analysts are now picking up what we’ve been telling you for more than six months, AI has a problem that needs a fix!
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.
But there is a solution.
In September, Constellation Energy (CEG) announced that they would be restarting the Three Mile Island nuclear plant in a move to start increasing energy supply to meet AI’s growing demand.
There’s a catch though. Constellation is working directly to sell power from this plant directly to Microsoft (MSFT) to power their data centers. This follows the news earlier this week that Microsoft is teaming up with Blackrock to launch a launch an artificial-intelligence fund to enhance AI supply chains and energy sourcing.
The deal between Microsoft and Constellation was just the beginning.
Amazon bought a data center from Talen Energy in March, that center is powered by the Susquehanna nuclear plant.
Alphabet and Meta are working with data centers and companies like Duke Energy to potentially expand their data center networks to North Carolina.
The message here is clear.
WATCH: Trump set to unleash huge amounts of energy in the first year of his term. (Sponsored)
We’re going to see a rush into these two spaces over the next five years as AI technology is fully released into the business environment.
Companies like IBM, Salesforce.com and Palantir are among my favorite AI service companies, but the space between them is where another huge opportunity lies.
Companies like Digital Realty, Iron Mountain and other data centers are growing at an unprecedented as they rush to get ahead of additional demand.
Clearly a player, Constellation is the company that is restarting the plant at Three Mile Island to partner with Microsoft. Sidenote, the company is renaming the plant “Crane Clean Energy Center”.
In addition to that facility, Constellation Energy also operates all six nuclear power plants located in Illinois. Why is that important?
One of Iron Mountain’s largest data center expansion plans lies in the state of Illinois.
Constellation Energy shares are trading more than 100% higher over the last year, outpacing almost all the “AI Stocks” except for NVIDIA. Give that some time though as CEG is in the earlier stages of growth while NVIDIA is a little higher on their AI growth trajectory.
Duke Energy is the second largest operator of nuclear plants in the US.
Duke energy’s nuclear footprint is strong in North Carolina with six plants in operation. One of those plants sits in Catawba County, which has been marketed as a growing data center hub for the last decade. The county’s proximity to Charlotte makes it an attractive alternative for data centers.
Moving away from there, western North Carolina is seeing fast data center growth as Apple, Google and Facebook have been taking advantage of inexpensive land prices and less regulation to create a data center hotspot. Conveniently, Duke Energy has a large footprint of nuclear and hydro plants in the area.
Small modular reactor stocks are exactly what the name suggests.
Several companies are in the process of developing smaller scale nuclear reactors that may be used to power data centers independently allowing the centers to have their own grid.
The move opens the possibilities of locating new data centers and could quickly answer the larger question of how to power them.
These companies are in the development phase, so keep in mind that they are more speculative in nature and that they can’t be expected to generate profits for a long time.
That said, these are the type of companies that one could see being purchased by a data center or AI company to “package” AI infrastructure solutions.
NuScale Power specializes in advanced small modular reactor (SMR) nuclear technology, offering the NuScale Power Module - a pressurized water reactor capable of generating 77 megawatts of electricity or 250 megawatts of thermal energy.
Founded in 2007 and headquartered in Portland, Oregon, NuScale is known for its innovative approach to nuclear power, providing scalable, safe, and reliable carbon-free energy. In January 2023, its 50 MWe design became the first SMR certified by the U.S. Nuclear Regulatory Commission (NRC), with a more powerful 77 MWe design currently under review.
NuScale’s technology is designed to support the global energy transition, offering solutions for electricity generation, district heating, and more. While the company has faced financial challenges, including layoffs and project cancellations due to rising costs, it has recently secured capital to focus on its core business.
Shares of NuScale have surged over 200% in the past year after dipping below $3.00, and the stock is now trading in a long-term bullish trend, with a price target of $50.
I’ve covered this stock heavily since its debut earlier in 2024.
Early in its growth, NANO Nuclear Energy is a development company focused on microreactor technology.
The company aims to transform the energy landscape with small-scale, portable nuclear reactors. These reactors, including models like "ZEUS" and "ODIN," are designed to fit within standard shipping containers, making them highly deployable to remote locations or for specific industrial uses.
The company emphasizes safety and efficiency, with reactors capable of generating between 1 to 5 megawatts of power, ideal for small communities or industrial sites.
NANO's approach includes significant advancements in nuclear fuel technology and strategic partnerships to enhance the scalability and regulatory approval of their technology.
The company has engaged in proactive regulatory dialogues (note that no regulatory hurdles have been crossed) and is conducting rigorous testing and licensing procedures to ensure their reactors meet safety standards.
Nano Nuclear shares closed 2024 with gains of only 10% as the stock dipped as low as $6.50 in August. The stock is trading more than 400% above those lows as it begins trading for 2024.
Investors should expect bullish volatility in Nano Nuclear shares as the stock continues its “discovery” phase.
Our outlook remains bullish for Nano Nuclear with a price target of $45.
