In recent times, companies with nuclear reactors have significantly benefited from the rising demand for nuclear power. Firms such as Constellation Energy (CEG) and Vistra Energy (VST) have seen their stock prices more than double this year. Meanwhile, a new group of companies focused on designing, constructing, and fueling innovative reactors is emerging, including NuScale Power (SMR), Oklo (OKLO), BWX Technologies (BWXT), and Centrus Energy (LEU, Financial).
Amazon (AMZN) recently announced plans to fund the construction of small nuclear reactors in Washington state and invest in nuclear energy startup X-energy. Earlier, Alphabet (GOOG), Google's parent company, agreed to support Kairos Power, a private nuclear reactor developer, in developing multiple reactors. Although the financial terms were not disclosed, Kairos plans to launch its first reactor by 2030 and build more by 2035.
Tech companies are increasingly sourcing electricity from nuclear power plants to power data centers, crucial for artificial intelligence applications. Microsoft (MSFT) signed a contract with Constellation Energy to purchase electricity from a Three Mile Island reactor, while Amazon has acquired a data center linked to a Talen Energy nuclear plant in Pennsylvania.
Kairos is among the developers of small modular reactors (SMRs), which are smaller, quicker to build, and more efficient. Unlike conventional reactors generating about 1000 megawatts, SMRs like Kairos's, which produce 75 megawatts, offer a modular design with components prefabricated in factories. These reactors use alternative cooling and fuel methods, potentially offering better safety and cost benefits.
Despite the limited investment options in companies like Kairos and Terrapower due to their private status, some developers such as Oklo have gone public. Oklo's shares increased by 70% recently due to optimism in the nuclear energy market, though the stock remains volatile. NuScale, the only SMR developer with a U.S. Nuclear Regulatory Commission design approval, saw its stock quadruple this year despite facing challenges in securing power purchase agreements for its Idaho project.
Another investment approach is through uranium, essential for fueling reactors. Key players include Cameco (CCJ), NexGen Energy (NXE), and Uranium Energy (UEC). Centrus Energy (LEU, Financial) is noteworthy for its domestic uranium enrichment capabilities, especially given recent U.S. legislation prohibiting Russian uranium purchases. Centrus is selling a special type of uranium called HALEU, used by numerous SMR developers.
