Nuclear Energy Charging Up to Power AI: Buy ETFs on Dip?

Nuclear energy is rapidly emerging as a choice for powering artificial intelligence (AI) systems due to its ability to provide a stable, high-output source of electricity. As AI technologies continue to grow and require more computational power, the demand for reliable energy sources becomes important.Impact of AI on Power DemandAI is poised to drive a 160% increase in data center power demand by 2030, per Goldman Sachs. On average, a ChatGPT query needs nearly 10 times as much electricity to process as a Google search. At present, data centers worldwide consume 1-2% of overall power, but this percentage will likely rise to 3-4% by the end of the decade.Case for Nuclear EnergyThis is where the demand for nuclear energy lies. The world is striving to cut down on carbon emissions, and consumers and corporations are opting for cleaner versions of energy. However, unlike other renewable sources, which can be intermittent, nuclear energy offers a consistent solution. Additionally, advancements in nuclear technology, such as small modular reactors, are making it more adaptable and safer for widespread use.Will Republicans Back Nuclear?Banking behemoths, including Bank of America BAC, Citi C, and Morgan Stanley MS recently pledged for the goal of tripling nuclear power. While Democrats have been more hesitant to support it due to environmental concerns, most Republicans have been pro-nuclear. And with Republican winning the U.S. election, we can expect more nuclear energy production to power AI, going forward.Inside the U.S. Power Grid's ChallengesStates such as Georgia, Arizona, and Texas are already struggling to meet rising electricity needs. The growing demand from AI and data centers increases this challenge. Nuclear energy offers the only scalable solution to ensure the U.S. power grid can handle future demands effectively..Big Tech’s Rush to Nuclear Energy SuppliersRecent deals by giants like Microsoft, Amazon and Google with U.S. suppliers to purchase nuclear power indicate their commitment to utilizing low-carbon electricity to energize their AI data centers. According to CNBC, Google GOOGL recently announced plans to buy power from a fleet of small modular reactors (SMRs) developed by Kairos Power, stating that its first nuclear reactor from Kairos Power is expected to be operational by 2030, with additional reactors coming online by 2035.Microsoft also followed suit, as quoted on CNBC, signing an agreement with U.S. energy firm Constellation CEG recently, to revive a dormant reactor at the Three Mile Island nuclear power plant in Pennsylvania. Amazon, too, recently announced a $500 million deal with Dominion Energy D to explore the development of a small modular reactor near Dominion’s North Anna nuclear power station, per CNBC.Time to Tap Uranium ETFs? Being an essential component in sustainable and reliable energy generation, the growing interest in nuclear energy has led to an optimistic outlook for Uranium. But the supply of uranium is in crunch.Kazakhstan, the leading uranium producer globally, accounting for approximately 45% of global production, recently announced a 17% cut in its forecasted production for 2025.Investors can thus use the following pure-play uranium-related exchange-traded funds (ETFs) to capitalize on the latest growth trajectory. Notably, these ETFs are down past month as chip giants (the backbone of AI) have underperformed during that timeframe.Profit booking, downgrades of some chip biggies by analysts, China’s probe for chip giant NVIDIA, some subdued earnings results — weighed on the chip space. Since uranium now falls in the AI investing periphery, this dip can be an entry point to the below-mentioned ETFs.VanEck Uranium and Nuclear ETF NLR – down 1.8% past month (as of Dec. 5, 2024)Global X Uranium ETF URA – down 0.5% past monthSprott Uranium Miners ETF URNM – down 0.3% past month Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report Morgan Stanley (MS): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis Report Constellation Energy Corporation (CEG): Free Stock Analysis Report Dominion Energy Inc. (D): Free Stock Analysis Report VanEck Uranium and Nuclear ETF (NLR): ETF Research Reports Global X Uranium ETF (URA): ETF Research Reports Sprott Uranium Miners ETF (URNM): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks