Stock Market

Investing in uranium and nuclear stocks makes a lot of sense to me from a very long-term perspective.

Why? Because the demand for clean, reliable, and efficient energy sources amidst a global push for decarbonization is only going to increase. Nuclear power, with its low-carbon footprint, offers base-load electricity without the intermittency issues of renewable sources. Uranium, as the critical fuel for nuclear reactors, is poised for a potential supply crunch as existing mines are depleted and new projects face long lead times, suggesting a favorable supply-demand dynamic. Furthermore, advancements in reactor technology, such as small modular reactors (SMRs), signal a new era of safer and more flexible nuclear applications. This will potentially expand the market.

The momentum is real and doesn’t look like it wants to slow down.

What’s the real catalyst? I think it’s very clear – it’s AI.

AI Is Driving Gains in Nuclear Stocks

The projected electricity consumption associated with artificial intelligence is expected to see a significant increase in the coming years. The International Energy Agency included projections for electricity demand from data centers, cryptocurrency, and AI, estimating that these combined uses represented almost 2% of global energy demand in 2022 and could double by 2026. Additionally, AI workloads accounted for 8% of the estimated 54 GW of electricity used by data centers in the past year, with expectations for this share to rise to 15%-20% by 2028.

Moreover, global electricity demand for AI could grow larger than the entire energy consumption of Argentina by 2027. These projections suggest that AI will become a significant consumer of electricity as its applications and implementations grow.

This is unstoppable, and to feed the AI beast, the world needs a lot more electricity. This is a very long-term theme, and I think investors are starting to wake up to this fact.

If you’re bullish on AI, then you cannot ignore uranium and nuclear stocks. And I don’t sense that we are in a euphoria stage here. So, no matter how right I might be about short-term risks, I think the long-term dynamics are undeniable, and very early for those with a long enough time frame.

On the date of publication, Michael Gayed did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. Information within this material is not intended to be used as a primary basis for investment decisions and should also not be construed as advice meeting the particular investment needs of any individual investor. Trading signals produced by the Lead-Lag Report are independent of other services provided by Lead-Lag Publishing, LLC or its affiliates, and positioning of accounts under their management may differ. Please remember that investing involves risk, including loss of principal, and past performance may not be indicative of future results. Lead-Lag Publishing, LLC, its members, officers, directors and employees expressly disclaim all liability in respect to actions taken based on any or all of the information on this writing.

Michael A. Gayed is the Publisher of The Lead-Lag Report, and Portfolio Manager at Tidal Financial Group, an investment management company specializing in ETF-focused research, investment strategies and services designed for financial advisors, RIAs, family offices and investment managers.

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