Following Oracle, Microsoft, and Google, Amazon has also announced investments in nuclear power, specifically backing the development of Small Modular Reactors (SMRs) in the U.S. This news fueled a strong rally in uranium mining and nuclear energy stocks on Wednesday. Investors are optimistic about the resurgence in nuclear energy demand, with solid reasons behind this sentiment.
Industry leader Cameco (CCJ) saw its stock rise 8.2% during the day, Denison Mines (DNN) surged 14.7%, and smaller company Energy Fuels (UUUU) climbed 17%. Additionally, NuScale Power (SMR), a company producing SMRs, saw its stock skyrocket 31.6% to an all-time high.
Last month, Microsoft reignited interest in nuclear energy stocks by signing a power purchase agreement with Constellation Energy (CEG), the largest clean energy supplier in the U.S. According to the agreement, Constellation will restart the Three Mile Island Nuclear Station in Pennsylvania to support Microsoft’s growing artificial intelligence (AI) needs.
This week, following announcements from both Alphabet and Amazon regarding nuclear power agreements for their data centers, the industry’s stock surge gained momentum.
Google, a subsidiary of Alphabet, has partnered with private firm Kairos Power to construct a series of SMRs with a total capacity of 500 megawatts. On Wednesday, Amazon announced plans to collaborate with Energy Northwest, Dominion Energy, and private firm X-energy to build several SMRs. Although AI was not explicitly mentioned in the press release, it’s likely these nuclear resources will support Amazon’s future AI services.
SMRs represent an emerging concept in the nuclear energy sector. They aim to reduce costs and accelerate the construction of nuclear plants through mass production techniques. Compared to large nuclear power plants, SMRs are characterized by their smaller size, faster construction times, and lower costs, making them theoretically better poised to boost demand for nuclear energy and uranium quickly.
This promising outlook sparked investors’ strong interest in uranium producer stocks on Wednesday.
The International Atomic Energy Agency (IAEA) at its 68th General Conference raised its nuclear energy outlook for the fourth consecutive year: under its high-case scenario, global nuclear capacity could increase by 2.5 times by 2050, aligning with the global consensus to expedite nuclear deployment. Around 30 countries are considering or advancing plans to incorporate nuclear power into their energy mix, while others are expanding existing nuclear plants and extending their lifespans.
Though the nuclear power industry’s prospects are promising and uranium stocks have recently been hot, investors should pay attention to valuations.
Specifically, even with the recent price spikes, Denison Mines’ market cap remains under $2 billion with a price-to-earnings (P/E) ratio of 47. In contrast, Cameco’s market cap exceeds $24 billion and has a high P/E of 129, with a forward P/E of 27.5 based on expected earnings in 2028. As for Energy Fuels, its market cap is $1.3 billion, with valuations slightly cheaper than Denison’s.
