In the Era of Artificial Intelligence, What Is the Reason Behind the Huge Amount of Money Betting on Nuclear Energy?

大笔资金押注核能背后的原因是什么
Published on: Oct 25, 2024
Author: Amy Liu

Major investments are being placed on nuclear energy, as Microsoft (MSFT) has just partnered with utility provider Constellation Energy (CEG) to restart idle nuclear plants in Pennsylvania. Clearly, Microsoft not only fundamentally believes that nuclear energy is safe but also sees nuclear power as essential for supporting the flourishing of artificial intelligence.

Alphabet (GOOGL) has announced its intention to begin purchasing nuclear energy to power its AI data centers, and Amazon (AMZN) plans to do the same.

Meanwhile, 14 major Wall Street banks, including Goldman Sachs (GS), Morgan Stanley (MS), and Bank of America (BAC), have recently announced that they will jointly back efforts to triple the world’s nuclear capacity by 2050. This is not just a Wall Street phenomenon; governments around the world are also heavily investing in the future of nuclear energy. Clearly, a nuclear resurgence has begun! This is a significant investment theme that could yield many major stock market winners. In fact, since early September, several nuclear stocks have surged over 100%.

In recent years, the global power grid has been under pressure due to increased energy demands. With the rise of artificial intelligence, the world may soon face a massive energy crisis. The energy required for AI applications far exceeds that of traditional applications. For instance, a typical ChatGPT search consumes ten times more electricity than a conventional Google search.

As the world shifts from traditional computing applications across all industries to AI-driven computing applications, global energy demand will increase dramatically.

In fact, Goldman Sachs estimates that power demand for data centers will grow by 160% by 2030 due to AI. Morgan Stanley forecasts that the energy demand for generative AI will increase nearly fivefold over the next three years. Wells Fargo predicts that energy demand from AI will surge by 8,050% between 2024 and 2030.

Energy demand may skyrocket in the coming years. With global energy supplies already limited, this presents a significant challenge. Therefore, any entity that provides solutions and produces the energy necessary to support the prosperity of AI could see substantial demand, revenue, and profits in the coming years. Companies that solve this problem may emerge as the next winners in the AI stock market, making nuclear energy stocks worth watching.

Nuclear Energy: An Unexpectedly Safe Power Source

Once upon a time, nuclear energy was hailed as the best power source in the world. That was several years ago, before a number of headline-grabbing disasters occurred. However, nuclear technology has significantly improved over the past few decades. The industry has developed new fuels that are more resistant to radiation, corrosion, and high temperatures, as well as advanced instrumentation for monitoring every system and process.

The technology in this industry has improved. In fact, recent studies indicate that, based on actual usage data, nuclear power plants are much safer than traditional fossil fuel plants like coal, oil, and natural gas. Objectively, nuclear energy is safer than most other energy sources. After all, there are reasons why nuclear energy has been hailed as one of the best energy sources in the world.

So far, nuclear energy is the most efficient and also one of the cheapest energy sources available. It is estimated that the cost of producing one megawatt-hour of nuclear energy is $71. Coal costs about $93 per megawatt-hour, approximately 30% higher than nuclear energy. Natural gas costs more than $100 per megawatt-hour, about 50% higher than nuclear. The costs of wind and solar energy are roughly twice that of nuclear energy.

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