With the market's rampant interest in artificial intelligence (AI), investors have begun to pay greater mind to nuclear energy stocks and, with them, nuclear energy exchange-traded funds (ETFs). For investors who don't closely follow the AI industry, the connection between AI and nuclear energy may seem odd.
Artificial Intelligence
But the reason is simple. AI computing places considerable power demands on the electrical grid -- a problem that many believe can be ameliorated by data centers embracing nuclear energy.
Experts believe that the sizable power demands that AI is causing will continue to escalate. According to consulting firm McKinsey, "demand for AI-ready data center capacity could rise at an average annual rate of 33 percent between 2023 and 2030."
To put into perspective the growing size of data centers, consider that Oracle (ORCL +0.75%) Chairman and Chief Technology Officer Larry Ellison said on the company's first-quarter 2025 conference call that it's developing an 800-megawatt (MW) data center that "will contain acres of Nvidia (NVDA -0.44%) GPU [graphics processing units] clusters for training large-scale AI models."
Three small modular reactors (SMRs) are planned to power the data center. McKinsey estimates that the average data center size is 200 MW.
Government attention to nuclear energy is another factor motivating investors to take a closer look at this niche of the energy sector. Providing support for the nuclear industry, the Biden administration developed a framework for the deployment of 200 gigawatts (GW) of net new nuclear energy capacity by 2050. The Trump administration has loosened regulations and called for 300 GW of nuclear power by 2050.
Understanding nuclear energy
While investors may recognize the strong attention that nuclear energy is receiving right now, many may still be unclear about what exactly nuclear energy entails. And since the best investors are well-informed investors, it's worth taking a quick look at how nuclear energy is used to generate electricity.
Essentially, nuclear energy results from two types of reactions: nuclear fission and nuclear fusion. Nuclear power plants generate electricity from nuclear fission, the process of splitting the nucleus of an atom into smaller parts, which results in the production of free neutrons and lighter nuclei, along with a large amount of energy.
The process generates substantial amounts of heat, which is then used to produce steam for driving turbines connected to electricity generators. Unlike burning fossil fuels, no carbon dioxide is produced when electricity is generated as a result of nuclear fission.
Types of nuclear energy ETFs
Just as a variety of individual stocks afford exposure to the nuclear energy industry, several ETF options are available to investors. Since nuclear energy relies on uranium as a fuel source, for example, investors have the option of ETFs concentrated on uranium mining companies.
These businesses often have operations throughout the uranium value chain, from the identification of uranium resources to the production of nuclear fuel.
Another uranium mining option that exists is junior mining companies. These smaller companies are committed to identifying new uranium resources and often don't have extensive operations. While they're more speculative, they also offer the potential for high rewards.
Conversely, those interested in more diverse exposure may elect to pick up shares of an ETF that provides broad nuclear exposure, including everything from uranium producers to utilities that operate nuclear power plants to upstart companies developing SMRs.
Three top nuclear energy ETFs to buy in 2026
While investing in individual nuclear energy stocks is certainly a valid approach, investors interested in mitigating risk may find nuclear energy ETFs more appealing since the downturn of an individual stock that's part of a fund will have a less ruinous effect on one's portfolio than investing in a single stock.
1. Global X Uranium ETF
With 49 holdings in its portfolio and $5.96 billion in net assets, the Global X Uranium ETF (URA +3.07%) provides investors with ample exposure to the nuclear energy industry. Besides companies that produce uranium, the ETF includes businesses that make nuclear components and provide services for nuclear power plants.
NYSEMKT: URA
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3. VanEck Uranium and Nuclear ETF
Unlike the previously mentioned nuclear energy ETFs, the VanEck Uranium and Nuclear ETF (NLR +2.39%) will appeal to investors who are also looking to generate some passive income. It has a 30-day Securities and Exchange Commission (SEC) yield of 0.8% and makes annual distributions.
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How to choose the right nuclear energy ETF
Because the goals of individual investors vary, it's impossible to categorically say which qualities are most important when considering a nuclear energy ETF. Broadly speaking, though, one consideration is whether investors are seeking passive income. Since many nuclear energy ETFs include growth companies that don't pay dividends, many nuclear energy ETFs will likely elect not to make distributions.
Another factor for investors to consider is their risk tolerance. For those who are comfortable with a higher degree of risk and are interested in more speculative investments, an ETF that includes junior mining companies or one that includes upstart SMR companies, like Oklo and NuScale Power, may be a smart choice.
On the other hand, conservative investors may feel more secure choosing a nuclear energy ETFs that include established companies that generate consistent revenues and profits like Cameco and Constellation Energy.
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