Artificial intelligence (AI) took the world, and the stock market, by storm in early 2023 and has not slowed since. Investors have flocked to the businesses developing and producing the chips to power AI models, the cloud firms constructing massive AI data centers, and even the software firms deploying AI applications.
Nonetheless, the energy required to power all this innovation could turn into an increasingly hot topic in the approaching years. In keeping with estimates by Wells Fargo, AI technology’s electricity consumption could increase from 8 terawatt-hours in 2024 to 652 terawatt-hours by 2030. Nuclear power could help solve this challenge. Emissions could discourage fossil fuel use, and renewable energy stays too intermittent to rely upon alone. That opens the door for nuclear power, which is efficient and clean.
AI’s long-term energy needs could help fuel growth in firms exposed to nuclear energy, so consider buying these three top nuclear stocks in January.
Uranium is the fuel used for nuclear fission, and Cameco(NYSE: CCJ) is one in every of the leading uranium producers. The Canadian company accounts for roughly 18% of the worldwide uranium supply and has controlling interests in uranium mines in Canada, the US, and Kazakhstan. The corporate is poised for long-term growth as big technology firms and whole countries consider nuclear power as a method to meet energy needs while reducing carbon emissions. For instance, Meta Platforms recently announced plans to source nuclear energy to power its AI data centers, starting within the early 2030s.
It’s becoming apparent that nuclear energy is gaining momentum. In keeping with the International Atomic Energy Agency, 63 nuclear reactors are currently under construction, and demand for nuclear could grow by as much as 2.5 times its current capability by 2050. As well as, geopolitical tensions, including the U.S. ban on uranium imports from Russia, could further boost business for Western producers like Cameco.
Cameco’s business has picked up over the past couple of years. Analysts estimate that the corporate’s revenue will hit $2.3 billion in 2025. Assuming governments and corporations proceed supporting nuclear energy, this might be the early stages of a really long growth story.
Those that don’t desire a pure nuclear investment could consider Southern Company(NYSE: SO), one in every of the biggest energy firms in the US. Its core businesses include electricity generation and electric and natural gas utilities that serve greater than 9 million customers. Utility businesses produce dependable revenue streams because society’s energy needs never stop. Southern Company’s energy production also spans several sources, including gas, coal, nuclear, and renewables.
Southern Company has invested heavily in nuclear energy. It operates eight total power units across three plants, and its newest units were the primary newly constructed within the U.S. for industrial operations in three many years. Earlier this yr, Microsoft and Constellation Energyinked a 20-year deal to restart a nuclear power unit on the Three Mile Island Nuclear Station in Pennsylvania to power its data centers. This potential game-changer for the industry opens the door for Southern Company, positioned near Virginia, the country’s data center capital, to do something similar.
Within the meantime, the stock offers a 3.5% dividend yield, compensating shareholders for holding the stock. It is not the most cost effective utility, at 20 times earnings, nevertheless it is not unbearable for long-term investors, especially if AI tailwinds rev up Southern Company’s long-term growth.
Longtime conglomerate General Electric split into pieces, and its energy business, GE Vernova(NYSE: GEV), now stands by itself. GE Vernova is a diversified clean energy technology company that deals in clean power generation, grid electrification, and wind and gas turbines. Its power generation business includes nuclear, providing reactors, fuel, services, and steam turbines for electricity generation.
Society is slowly and steadily transitioning from fossil fuels to cleaner energy alternatives. Such a shift will take a few years, potentially positioning GE Vernova for a multidecade growth opportunity. Management currently anticipates high single-digit revenue growth through 2028. GE Vernova can also be investing $5 billion cumulatively through 2028 in research and development to drive long-term growth.
The stock is not low-cost, at a forward P/E ratio of 124. Nonetheless, analysts estimate the corporate will grow earnings by a mean of 46% annually over the subsequent couple of years, so strong earnings growth comes with that price tag. Investors unsure about buying in here can nibble for now and buy more aggressively if the stock pulls back. That said, it’s hard to not just like the stock’s long-term potential amid soaring electricity demand and a clean energy transition.
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Wells Fargo is an promoting partner of Motley Idiot Money. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Idiot’s board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Meta Platforms. The Motley Idiot recommends Cameco and Constellation Energy. The Motley Idiot has a disclosure policy.
