The accelerating growth of artificial intelligence (AI) has resulted in higher electricity consumption. Fortunately, the resurgence of nuclear power generation today appears to be well-timed. The AI infrastructure, comprising hardware, software, and networking elements, has introduced a fresh demand for power, consuming increasing amounts of electricity in areas with previously low or negligible demand. In this context, nuclear power, with its renewed appeal due to low carbon emissions and round-the-clock reliability, appears ideally positioned to meet the skyrocketing power demands driven by AI.
As a result, nuclear power stocks, especially the less regulated companies such as Constellation Energy (NYSE:CEG), and Vistra (NYSE:VST), have experienced over 90% growth over the past year. Constellation CEO Joe Dominguez expressed the trend in a recent earnings call, he said, “The world clearly is moving in our direction”.
The AI Revolution and its Power Demand
There is a revolution to integrate AI efficiencies into almost everything, resulting in a surge in electricity demand. This demand is particularly high in data centers, projected to consume 7.5% of global power by 2030.
Companies like Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) are actively pursuing clean energy sources to achieve their carbon footprint reduction goals, with nuclear power emerging as the preferred choice.
Which Power Companies Could Benefit Most?
Some power companies with nuclear-generating capability could benefit more than others as AI continues to drive up electricity demand. The largest beneficiaries are expected to be nuclear power companies with substantial independent (non price-regulated) nuclear capacity. Experts have identified at least three companies – Constellation Energy (NASDAQ:CEG), Vistra (NYSE:VST), and Public Service Enterprise Group (NYSE:PEG) – as poised to benefit.
Investor Takeaway
The AI revolution has created a significant opportunity for nuclear power companies to capitalize on the growing demand for electricity from data centers. With political support and technological advancements, the nuclear power industry is experiencing a revival, and nuclear power stocks, especially those less restricted by regulators, are well-positioned to outperform as the adoption of AI continues to accelerate.
