The Future of Nuclear Energy: AI & Investment Trends

• AI and big tech are accelerating the adoption of nuclear energy and SMRs
• Technology companies are aligning with nuclear to meet ESG goals
• Investment is flowing into nuclear but gaps remain in the financing chain
• Uranium equities have been volatile but are poised for growth
• Supply challenges and geopolitical factors are creating a bullish case for uranium prices

Reflecting on AI & Nuclear Energy

The emergence of artificial intelligence and its enormous energy demands have shed new light on the importance of nuclear power. As Colin Healey notes, "the validation of nuclear from the deepest pockets in the world" like Google, Microsoft, and Amazon seeking to power their data centers with nuclear energy is a major development. Beyond just consuming energy, these tech giants are providing a "template" and "framework" for the construction and financing of small modular reactors (SMRs). Their early adoption is critical to bringing down costs and proving out the technology.

While AI's ravenous energy needs alone may not necessitate a surge in nuclear, the desire of tech companies to have reliable, carbon-free power is a key driver. As Healey puts it:

"It's this push for green energy to power these data centers that's going to make it much easier to adopt once several get built."

The Energy Show, with Colin Healey, CEO of Premier American Uranium

The Role of Technology in Energy Demand

Both the energy intensity of artificial intelligence and nuclear power's ability to meet that demand in a clean, reliable way are major factors in the rising interest in nuclear. However, Healey cautions that AI's energy consumption, while substantial, may not single-handedly cause a spike in demand that only nuclear can fill.

"Is it so substantial at this point that I think that it has to absolutely be powered by new nuclear technology? That's not my thinking. My thinking is that they're going to power it by new nuclear technology because it's green, and because they need power quickly. They believe in the reliability of the technology to deliver continuous base load uninterrupted power to their data centers."

The long-term, consistent nature of this demand and the ability to build dedicated power sources is the real opportunity for nuclear. And with deep-pocketed backers, there is potential to accelerate the development and de-risking of SMR technology.

Green Energy & Corporate Responsibility

Even with shifts in political administrations, major technology companies are likely to maintain a commitment to clean energy that goes beyond any one government's policies. As global entities with environmentally-conscious customers, it is in their interest to pursue carbon-neutral solutions.

"I think that they have to take a long term view. I think that you really truly do have bipartisan support for nuclear in the US... But I think it takes time."

He believes companies will power data centers with nuclear "because it's reliable, because it's available and because it's green," adding that "in an environment where it's possible to deliver, why shouldn't we deliver it?"

This long-term view of nuclear as a crucial piece of meeting corporate sustainability goals is a positive force for the industry.

Investment Trends in Nuclear Energy

Financing remains a key piece of the puzzle in the nuclear power resurgence. While capital is beginning to flow in, there are still gaps and open questions, especially further upstream.

Private equity and venture capital firms are looking at opportunities in nuclear but often focused on downstream applications like storage and innovation rather than new power plant construction or securing fuel supply. Government support and changes in permitting are seen as important to increasing the bankability of nuclear projects and attracting more investment throughout the chain.

"A more efficient permitting regime for new nuclear reactors will, and this is kind of specifically addressed in the comments that the chairman of the NRC made. It's basically recognition that we need to streamline certain processes to make them bankable, to make risk capital come in. And that kind of recognition is probably more important than people think."

Market Dynamics & Uranium Equities

For uranium mining companies and investors, the bull case is clear across near, mid, and long-term horizons. But despite spot prices stabilizing in the $70-75/lb range, equities have struggled, especially on the junior end.

"We've got this incredibly bullish case for uranium that I can lay out for you for present, midterm, long term - it's incredibly bullish. But yet, uranium stocks on average did fairly poorly in the last 12 to 16 months."

He attributes this partially to the disconnect between spot price movements, which can be influenced by financial players, and actual market fundamentals. Ultimately, he believes "we need to see the spot price start to reflect the actual severity of the supply shortfall that we're in and how difficult it's going to be for the supply to catch up."

As prices rise to incentivize new production, Healey sees uranium equities responding in turn, though the timing is difficult to predict:

"I do think that we're going to have to see a spot price movement to really see the equities pick up and respond... And I think that people should be positioning for a stronger market 18 months from now."

Mergers & Acquisitions in the Uranium Sector

Industry consolidation through mergers and acquisitions is likely to play a role in the uranium market's development, though current conditions make dealmaking tricky. Depressed equity valuations for junior miners contrast with a strong belief in the value of their projects, leading to wide bid-ask spreads.

"In an M&A environment where believers in the uranium space believe that all these projects are potentially valuable, more valuable than they're getting credit for. Equity valuations are suppressed. So I think as your enterprise value starts to move up, $10, $15 a pound, in a $85-$90 spot price environment, I think you'll see more M&A. We've seen before, M&A activity, especially larger M&A, tends to occur at peak uranium prices."

He sees potential for creative deal structures like joint ventures to provide financing and validation for junior miners. Overall, a rising uranium price is seen as the catalyst to spur a new wave of M&A.

Supply Challenges & Global Market Implications

On the supply side, even dominant producers like Kazatomprom are facing challenges, with some calling for increased Chinese investment to fill funding gaps. This could further tighten supply available to Western buyers. For companies like Premier American Uranium, the focus is on advancing projects at home. Healey argues:

"For Premier American Uranium, the United States has to prioritize energy independence and security. When you have uranium resources and you have some of the best technology and people in the world that are capable of mining and producing this safely and cleanly, then you should do it."

He sees supply restrictions ultimately as "price bullish concerns" that underscore the case for a sustained rise in uranium prices. "I don't see any way that prices don't go higher. And you know, the more things that happen that make it more difficult to get uranium, especially at the kind of mine level, the more likely we are to see higher prices and new mines built."

The Uranium Investment Thesis

• Rising demand driven by nuclear energy's role in decarbonization and powering energy-intensive technologies like AI
• Prominent investment and adoption of nuclear power by major tech companies seeking clean, reliable energy
• Potential for SMRs and advanced reactors to improve costs and accelerate deployment
• A growing supply deficit that will require substantially higher uranium prices to bring new production online
• Increasing geopolitical tensions and supply disruptions threatening availability to Western utilities

The world is waking up to the necessity of nuclear energy in the fight against climate change. Governments and corporations are increasingly aligned in pursuing this carbon-free source of baseload power. For uranium, the primary fuel underpinning the nuclear renaissance, the supply and demand fundamentals point to an impending inflection point.

As Colin Healey of Premier American Uranium puts it:

"Historically prices would go higher, there'd be a supply response and price would come down, but we never had the same under-supply alongside such an accelerating global reactor pipeline of what's now under construction."

While the timing is difficult to predict, the uranium industry appears poised for a sustained period of rising prices and robust activity. For investors, exposure to uranium miners and physical holdings offer significant upside potential as the market rebalances. Though risks remain, the asymmetric return profile is compelling. As the world goes nuclear, uranium stands to power both reactors and portfolios in the decades ahead.

Macro Thematic Summary

The macro landscape is aligning in uranium's favor. The intensifying drive to decarbonize the global economy positions nuclear power as an essential piece of the puzzle. While renewable energy sources like wind and solar play an important role, their intermittency makes nuclear's reliable baseload generation indispensable in the clean energy mix.

The rise of artificial intelligence and the staggering energy consumption required to power it add a new structural demand driver. With major technology companies like Google, Amazon and Microsoft racing to secure 24/7 carbon-free energy for their data centers, nuclear stands out as one of the few options that can meet their needs at scale. The geopolitical backdrop is also supportive, with many Western governments increasingly concerned about energy security and supply chain resilience. The growing awareness of the national security implications of relying on imported fossil fuels is leading to a re-prioritization of domestic energy production, including nuclear.

On the supply side, years of low prices have led to persistent undersupply, with the gap between demand and production expected to widen in the coming years. While new mines are in development, the long lead times and high capital costs pose barriers. Secondary supplies from inventories and enricher underfeeding are also dwindling.

This backdrop of rising demand and constrained supply points to a looming inflection point for the uranium market. As utilities rush to secure long-term contracts and new reactors come online, the stage is set for a powerful and potentially prolonged bull market. Though risks around regulation, public perception, and execution remain, the asymmetric upside potential for uranium is one of the most compelling macro opportunities on the horizon. In a world going electric, uranium offers exposure to the clean energy transition, electrification, and deglobalization themes, making it a timely macro bet.