Artificial Intelligence (AI) took the world and the stock market by storm in early 2023 and it hasn’t slowed down since. Investors have flocked to companies developing and producing chips to power AI models, cloud companies building massive AI data centers, and even software companies deploying AI applications.
However, the energy required to power all this innovation may become an increasingly hot topic in the coming years. As estimated by Wells FargoElectricity consumption of AI technology could increase from 8 terawatt-hours in 2024 to 652 terawatt-hours by 2030. Nuclear power can help solve this challenge. Emissions can discourage fossil fuel use, and renewable energy is too intermittent to rely on alone. This opens the door to nuclear energy, which is efficient and clean.
AI’s long-term energy needs could help fuel growth in companies exposed to nuclear power, so consider buying these top three Nuclear stock In January.
Uranium is the fuel used for nuclear fission, and Camco(NYSE: CCJ ) is one of the major uranium producers. The Canadian company accounts for about 18% of global uranium supply and has controlling interests in uranium mines in Canada, the United States and Kazakhstan. The company is poised for long-term growth as major technology companies and countries all over consider nuclear power as a way to meet energy needs while reducing carbon emissions. for example, Meta platform recently announced plans to source nuclear power to power its AI data centers, as early as the 2030s.
It is becoming clear that nuclear power is gaining momentum. According to the International Atomic Energy Agency, 63 nuclear reactors are currently under construction, and demand for nuclear could exceed its current capacity by 2.5 times by 2050. In addition, geopolitical tensions, including the US ban on uranium imports from Russia, could further boost business for Western producers such as Chemco.
Camco’s business has picked up in the past few years. Analysts estimate that the company’s revenue will reach $2.3 billion in 2025. Assuming governments and corporations continue to support nuclear power, these could be the early stages of a much longer development story.
Those who do not want a pure nuclear investment may consider Southern Company(NYSE: SO )is one of the largest energy companies in the United States. Its core businesses include power generation and electric and natural gas utilities serving more than 9 million customers. Utility businesses generate reliable revenue streams because society’s energy needs never stop. Southern Company’s energy production also spans a variety of sources, including gas, coal, nuclear and renewables.
Southern Company has invested heavily in nuclear power. It operates a total of eight power units across three plants, and its newest units were the first in the US to enter commercial operation in three decades. Earlier this year, Microsoft And Constellation energyA 20-year agreement was signed to restart nuclear power units to power its data centers at the Three Mile Island Nuclear Station in Pennsylvania. This potential game-changer for the industry opens the door for a southern company based near Virginia, the nation’s data center capital, to do something similar.
Meanwhile, the stock offers a 3.5% dividend yield, compensating shareholders for holding the stock. That’s not the cheapest utility, at 20 times earnings, but it’s not unbearable for long-term investors, especially if AI tailwinds boost the company’s long-term growth.
Long-time conglomerate General Electric was split into pieces, and its energy business, GE Vernova(NYSE: GEV )Now stands on its own. GE Vernova is a diversified clean energy technology company engaged in clean power generation, grid electrification, and wind and gas turbines. Its power generation business includes providing nuclear, power generation reactors, fuels, services and steam turbines.
Society is slowly and steadily transitioning from fossil fuels to cleaner energy options. Such a transition would take several years, potentially positioning GE Vernova for a multi-decade growth opportunity. Management currently expects high single-digit revenue growth through 2028. GE Vernova is also investing $5 billion cumulatively through 2028 in research and development to drive long-term growth.
The stock is not cheap at a forward P/E ratio of 124. However, analysts estimate the company will grow earnings by an average of 46% annually over the next few years, so strong earnings growth comes with that price tag. Investors are undecided about buying here, they may hold their nose for now and buy more aggressively if the stock pulls back. That said, it’s hard not to like the stock’s long-term potential amid rising electricity demand and a clean energy transition.
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Wells Fargo is an advertising partner of Motley Fool Money. Randy Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Justin Pope No position in any of the stocks mentioned. The Motley Fool has positions on and recommends Meta Platforms. The Motley Fool recommends Cameco and Constellation Energy. Motley Fool has a Disclosure Policy.
