This week, nuclear energy stocks became a hot topic in the news as political forces pushed to expand nuclear production and tech companies indicated their willingness to be buyers.
According to data provided by S&P Global Market Intelligence, Uranium Energy Corp. (UEC 2.28%) jumped as much as 26.1%, Cameco Corp. (CCJ 3.97%) rose 11.1%, American Superconductor (AMSC +3.50%) rose 23.5%, and NuScale Power (SMR +2.91%) was the huge winner by climbing 44.1% this week. The stocks are trading up 20%, 8.5%, 19.3%, and 37.1% respectively at 1:30 p.m. ET on Friday.
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Politics takes center stage
While politics isn't something investors should put too much value in for long-term investments, this week was particularly important because both presidential candidates were very bullish on both domestic energy production in the U.S. and nuclear power more specifically.
Nuclear energy has a unique position as a winner on multiple spectrums for policymakers. It's a domestic source of energy, which could reduce the import of foreign oil, and it's a clean source of energy. The challenge is that it's not popular to develop because some residents don't want to live near a nuclear plant.
Oracle making a bet on nuclear energy
This is where the tech industry's investment in artificial intelligence data centers could be a boom for the nuclear industry. Oracle CEO Larry Ellison said it is building a data center that will be powered by three small nuclear reactors.
Ellison didn't say where the data center is located but indicated that building permits are in hand. What's not clear is if or when small nuclear reactors would be up and running. Small nuclear reactors aren't anticipated to be commercially available until into the 2030s, so this announcement may be ahead of itself. But that didn't stop the market from being bullish on tech's new energy-intensive needs.
Russia restricting exports?
To pour fuel on the fire, Russian President Vladimir Putin said on Wednesday export restrictions on uranium, titanium, and nickel could be put in place in retaliation for Western sanctions. The U.S. is one of the biggest importers of uranium, so this could spur demand for companies like Cameco and Uranium Energy.
A bright future, but when?
It seems there's momentum behind the nuclear industry at the moment, but it takes time for momentum to turn into revenue. And that's the challenge all of these companies face.
As uranium suppliers, Uranium Energy and Cameco could benefit if Russia does reduce exports and the price of uranium rises, but that trend can quickly reverse as supply chains adjust.
While new data centers may use American Superconductor's efficient transmission technology or NuScale Power's small modular reactors, it will be years, if not decades, before many of these projects are built. Until then, it's speculation to think a financial turnaround is on the horizon.
AMSC Cash and Equivalents (Quarterly) data by YCharts
As much as I think nuclear power will be an increasing part of our energy future in the U.S., these stocks are far too speculative to buy today, so I will sit out the move and watch from the sidelines.
