2 stocks to watch as tech giants bet big on nuclear energy

As the race to advance artificial intelligence (AI) intensifies, tech giants like Microsoft (NASDAQ: MSFT), Google (NASDAQ: GOOGL), and Amazon (NASDAQ: AMZN) are making strategic moves toward nuclear energy to meet their rapidly growing power needs.

This shift is transforming the energy landscape and positioning nuclear power as a key resource for sustaining the immense, round-the-clock operations of AI-driven data centers.

While other forms of renewable energy, such as wind and solar, exist, nuclear energy is emerging as a more reliable solution for powering AI and cloud computing infrastructures, according to the U.S. Department of Energy. 

“On average, nuclear power plants are about 1.5 to 2 times more reliable than natural gas and coal plants, and roughly 2.5 to 3.5 times more reliable than wind and solar. Nuclear power plants are designed to run 24 hours a day, seven days a week, because they require less maintenance and can operate for longer stretches before refueling, typically every 1.5 to 2 years.”

—U.S. Department of Energy. 

The growing importance of nuclear energy

With major tech companies increasingly turning to nuclear energy, the sector is seeing a surge in interest and investment. 

Microsoft’s recent agreement to purchase power from the revived Three Mile Island nuclear plant and Google’s partnership with Kairos Power to deploy small modular reactors (SMRs) signal a broader shift toward nuclear energy as the solution to meeting AI and cloud computing’s massive energy demands.

Amazon has also joined the push, committing $500 million toward developing small nuclear reactor technology. 

Nuclear energy stocks on the rise

The growing demand for nuclear energy is fueling a significant surge in stocks linked to the nuclear sector, especially those involved in uranium mining and nuclear fuel technology. Indeed, Finbold reported how the AI boom fuels the demand for uranium as a promising commodity.

Two standout stocks benefiting from this momentum are Cameco Corporation (NYSE: CCJ) and Centrus Energy Corporation (NYSE: LEU). Both are set to capitalize on the rising need for nuclear energy, supported by major tech investments and government initiatives.

Cameco Corporation (NYSE: CCJ)

Cameco Corporation, a leading Canadian uranium producer, plays a crucial role in the global uranium market by supplying essential raw materials for nuclear energy. 

As the world’s second-largest uranium producer, Cameco operates high-grade uranium mines in Saskatchewan, Canada, and is well-positioned for long-term growth. 

CEO Tim Gitzel expects strong earnings growth in 2024, driven by rising global demand for nuclear power. Despite a recent dip in uranium prices, Cameco’s earnings are projected to rise significantly through 2025, supported by double-digit revenue growth.

The stock has surged 500% over the past five years, with a 50% increase since early September alone, bringing its current price to $56.75. 

It has gained 38% in the past month, and analysts maintain a strong buy consensus, with a price target of $66.56, indicating a potential 17.45% upside. 

Cameco’s forward price-to-earnings (P/E) ratio of 57.12 reflects high growth expectations, backed by robust financials, including $1.94 billion in revenue and $187.88 million in earnings over the past 12 months.

Centrus Energy Corporation (NYSE: LEU)

Centrus Energy is a leader in nuclear fuel technology, focusing on the production of low-enriched uranium (LEU) and advancing high-assay low-enriched uranium (HALEU) technology. 

This month, Centrus Energy announced that its subsidiary, American Centrifuge Operating, LLC, received a U.S. Department of Energy award to develop technology that converts high-assay, low-enriched uranium from uranium hexafluoride to uranium oxide or metal forms.

These contracts, which allow up to $2.7 billion in government funding, show the growing demand for nuclear fuel technology.

Centrus Energy’s stock has surged over 115% in the past month, buoyed by strong financial performance and ongoing innovation. 

The stock is currently priced at $90.34. Analysts maintain a “Buy” rating for the stock, citing its long-term growth potential despite short-term market volatility.

Over the past 52 weeks, Centrus has seen a 53.30% rise in its stock price. With a P/E ratio of 14.50, the stock is considered fairly valued. 

While some analysts forecast near-term price corrections, the long-term outlook remains bullish, making Centrus Energy an attractive option for growth-seeking investors.

In  conclusion, both Cameco and Centrus are well-positioned to benefit from the increasing reliance on nuclear energy by tech giants and governments, offering significant upside potential as AI and cloud computing continue to drive demand for reliable, sustainable power sources.