Nuclear energy demand is on the rise, driven by the massive power needs of artificial intelligence (AI) data centers. Because nuclear power possesses high power density and provides reliable, 24/7 baseload energy, it is increasingly becoming a top choice among major hyperscalers.
In the nuclear energy industry, innovative companies like NuScale Power (SMR -0.57%) have the potential to reimagine nuclear energy deployment with their small modular reactors. Meanwhile, established utilities such as Constellation Energy (CEG +4.66%), with their extensive nuclear fleet, stand ready to meet today's power challenges.
If you're looking to diversify your portfolio with nuclear energy stocks, there are a few key things you need to consider when considering an investment between NuScale Power and Constellation Energy right now.
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Next-generation data centers need nuclear power
Modern data centers require massive amounts of energy. Training large language models requires running thousands of high-performance graphical processing units (GPUs) for months on end, while AI queries provide steady demand for AI-generated answers. The emergence of autonomous AI agents is another massive driver of non-stop loops that require continuous, reliable operation of AI data centers.
To meet growing AI demand, data center chips are packed into compact clusters that handle parallel computing across billions of variables. Because servers generate significant heat, they also require large liquid-cooling systems that consume substantial energy.
According to Goldman Sachs, U.S. data center power demand could spike to 66 GW and account for up to 8.5% of U.S. peak summer demand by 2027. Bank of America analysts forecast that over the next five years, data centers could add 125 GW of new U.S. electric load, representing a compound annual growth rate of electricity demand of 4.1%.
Hyperscalers like Alphabet, Amazon, Meta Platforms, and Microsoft need reliable energy while also meeting their long-term carbon-reduction goals. These data centers can't afford interruptions, which means intermittent wind and solar power need an extra boost, which is where nuclear energy comes into play.
Over the last couple of years, hyperscalers have invested in small modular reactors (SMRs) and nuclear plant restarts to meet these massive future energy demands.
NuScale's small modular reactors could change how nuclear energy is deployed
NuScale Power is uniquely positioned in the SMR space, as it is the only company with a Standard Design Approval (SDA) from the Nuclear Regulatory Commission for its SMR technology. The company has an SDA for its 50-megawatt (MW) and 77 MW modules, giving it a crucial first-mover advantage in the advanced nuclear reactor space, where NRC approval can be a long and drawn-out process.
NYSE: SMR
Key Data Points
The company has one approved project in Romania, where it will look to install 462 MWe using six modules at a former coal plant site. The company received a Final Investment Decision from shareholders and the Romanian government. As part of the deal, NuScale will install one 77 MW module to ensure it is functional, with the remaining five modules contingent on the module proving operational. Operations for this power plant are planned to start in 2033.
Beyond this, NuScale hopes to deploy a massive 6 GW of its power modules with the Tennessee Valley Authority (TVA). The company is working closely with ENTRA1 to secure a firm power purchase agreement and hopes to finalize a deal by the end of the year.
Constellation Energy operates the biggest nuclear energy fleet in the U.S.
While NuScale is an up-and-coming nuclear energy company with a long timeline until its plants begin operations, Constellation Energy is an established utility company with a massive nuclear energy fleet. Constellation controls 22 GW of U.S. nuclear generation capacity and operates 21 commercial reactors at 12 locations.
Constellation has secured major deals over the past few years. In 2024, the company announced a 20-year power purchase agreement (PPA) with Microsoft, which involves the launch of the Crane Clean Energy Center and the restart of Three Mile Island Unit 1. The Crane Clean Energy Center will come online in 2028.
NASDAQ: CEG
Key Data Points
In June of last year, Constellation signed a 20-year power purchase agreement with Meta Platforms to provide 1,121 MW of nuclear energy, beginning in June 2027. As part of this agreement, Constellation will relicense and expand its Clinton nuclear facility located in Illinois.
The company also continues to build on its massive energy platform. On July 16, Constellation's venture capital arm, Constellation Technology Ventures, invested in Blue Energy, which builds prefabricated modular nuclear power plant structures off-site and ships them to their final location. The company uses phased delivery, meaning it deploys gas turbines first, which will eventually transition to nuclear plants when reactor installations are completed.
Which stock is a better buy today?
NuScale Power has a first-mover advantage with its NRC-approved SMRs. However, the company faces risks from the Department of Energy's Reactor Pilot Program, in which the DOE is leveraging its authority to reduce red tape and fast-track the testing and licensing of new reactor technologies by competitors.
For investors seeking explosive upside potential, NuScale could be an appealing buy, but it also carries massive risk, as it needs to secure additional contracts and prove it can successfully deploy and commercialize its SMR technology over the coming decade.
In contrast, Constellation Energy has an established fleet of nuclear capacity and is well positioned to benefit from booming energy demand in the near term, making it the better stock for investors looking to gain exposure to the growing nuclear energy industry right now.
