Energy is the lifeblood of the global economy, powering transportation, industry, homes, and now the data centers that run today's advanced artificial intelligence (AI) operations. As the U.S. strives for greater energy independence and a more resilient power grid, a diverse mix of oil, gas, nuclear, and renewable energy sources is crucial. Nuclear power is regaining momentum as a zero-carbon baseload source, while AI-driven electricity demand is reshaping grid priorities.
In this evolving landscape, smart energy investments span legacy giants, infrastructure leaders, and next-gen innovators. Here are five energy stocks taking advantage of this increased demand.
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1. Chevron
Chevron (CVX -2.25%) is an oil and gas giant that offers investors a smart way to play the upside in higher oil prices, but with more stability around its exploration and production efforts. The company has upstream operations (exploration and production) and downstream (refining and marketing) segments, providing it with resilience across oil price cycles.
The company has used its windfall in recent years to bolster its balance sheet and return a substantial amount of capital to shareholders through dividends and stock buybacks. In the past 12 months, Chevron spent $11.8 billion on dividends and another $16.1 billion buying back stock.
Recent years have been less favorable to the company, as oil prices have declined slowly. However, geopolitical tensions, including the recent Israel-Iran conflict, could potentially lead to higher oil prices.
Income investors could earn a yield of 4.6%, and the company has increased its payout annually for 38 consecutive years, showing how the balanced business is resilient amid oil and gas price fluctuations.
2. Enterprise Products Partners
Enterprise Products Partners (EPD 0.78%) is a midstream master limited partnership (MLP) with an extensive network of pipelines, storage facilities, and processing assets that cover oil, natural gas, and natural gas liquids (NGLs). Its contract and fee-based revenue model provides strong visibility into future cash flows and helps shield the company from fluctuations in commodity prices to some extent.
Enterprise has a solid track record of consistent distribution growth, currently yielding over 6.9%. This is supported by conservative payout ratios and low leverage. Its vertically integrated structure allows for margin capture across various segments, and ongoing expansion projects in petrochemicals and export terminals serve as additional growth catalysts.
3. Cameco
Cameco (CCJ -0.17%) is one of the world's largest uranium producers and is a pure play for investors looking to bet on the nuclear renaissance. As countries seek to address growing energy demand while lowering carbon options, demand for nuclear energy is rising and supply remains tight due to years of underinvestment and production cuts.
Cameco benefits from long-term contracts with price escalation clauses and owns stakes in high-grade assets, such as Cigar Lake and McArthur River. Its joint venture with Brookfield Renewable Partners in Westinghouse adds vertical integration into fuel services and reactor tech.
What makes Cameco appealing are its long-term contracts with utility companies, which provide it with a reliable buyer and a visible source of future revenue. Cameco has arrangements to provide an average of 28 million pounds of uranium annually through 2029.
With spot uranium prices rising and geopolitical concerns limiting supply (especially from Russia and Kazakhstan), Cameco is positioned for strong margin expansion. It also has properties in Saskatchewan and Australia with significant uranium deposits, allowing it to expand as demand for nuclear energy grows.
4. Constellation Energy
Constellation Energy (CEG 0.21%) is the largest U.S. producer of carbon-free electricity, primarily through its nuclear facilities, which account for over 86% of its output.
Constellation has predictable earnings through capacity markets and long-term power contracts, and it operates with relatively low fuel and operational costs. Its clean energy profile appeals to clean energy investors, and it's exploring hydrogen and storage as long-term growth avenues. It also benefits from policy tailwinds and rising demand for reliable, clean power from AI and data centers.
Last year, Microsoft entered into a power purchase agreement with Constellation, committing to buy nuclear energy to power its data centers. This month, Meta Platforms agreed to purchase 1.1 gigawatts of power from Constellation's clean energy center in Illinois.
Constellation is well-positioned as a top carbon-free energy provider, and more technology companies could turn to it to power their growing needs. Its large nuclear plant footprint and renewable focus position it well for the next several decades.
5. NuScale Power
NuScale Power (SMR -3.31%) is a speculative but potentially transformational play on nuclear energy via small modular reactors (SMRs). Unlike traditional large-scale plants, SMRs offer the potential for lower upfront costs, faster build times, and improved scalability, making them attractive for utilities and off-grid applications.
NuScale is developing an SMR power station in Romania, targeting a launch date of 2029. Not only that, but it now has two design approvals certified by the U.S. Nuclear Regulatory Commission, giving it first-mover advantage, which should help it as it looks to lock in contracts with prospective customers.
That said, project delays, cost overruns, and its cash burn remain a concern, especially since it is years away from commercial operations. This all makes NuScale a risky stock. But if it executes, its SMR technology could play a pivotal role in supplying much-needed energy in the coming decades.
