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Why SMRs will Play a Key Role in the AI Supercycle
Key Takeaways
AI is positioned as a larger technological shift than the internet.
The rapid AI-buildout is driving a surge in electricity demand.
Small Modular Reactors are becoming the energy source of choice for the Trump Administration.
AI: The Most Significant Breakthrough Since the Internet
Whether it is large language models, healthcare, software, shopping, or education applications, artificial intelligence is becoming the most significant technological breakthrough since the internet, and arguably the largest in history. In addition to the benefits of its practical uses, the artificial intelligence buildout will have economic and defense consequences. From a defense perspective, the impact is already being felt. For instance, Palantir ((PLTR - Free Report) ), the leader in AI defense and intelligence applications, is up ~1,800% since its 2020 IPO. Meanwhile, the country or countries that win the artificial intelligence race are likely to experience a productivity boom. Former Wall Street veteran and current Treasury Secretary Scott Bessent recently said, “There’s a very good chance with this AI boom that we’re seeing the productivity kick in as soon as the first quarter.”
AI Requires Immense Energy
Unsurprisingly, the two most competitive AI rivals are the two largest and most sophisticated economies: China and the United States. While most experts agree that the U.S. is off to a lead in AI technology, China enjoys a clear advantage in a critical aspect – energy. Data centers used to train AI models require immense power. For example, in 2022, the AI LLM data center share of total commercial electricity demand was just 3%. However, by 2027, the Energy Information Administration (EIA) expects that figure to leap to 12%.
Image Source: Center on Global Energy Policy
Nuclear: The Trump Administration’s Preferred Energy Source
The energy needs of the AI buildout are so vast that big tech companies will tap all forms of energy, including natural gas, coal, and solar. However, based on the Trump Administration’s actions, nuclear and small modular reactors specifically appear to be the energy source of choice. SMRs have several benefits, including:
· Off-grid capability: Instead of using the electrical grid, SMRs can function off-grid. Off-grid capability has two benefits: it does not drive up energy costs for local households, and the data center does not have to rely on the increasingly aging and unreliable U.S. electric grid.
· Clean Energy: Nuclear is considered “clean energy.”
· Pre-fabrication: SMRs are prebuilt in factories, requiring less on-site labor.
SMR Nuclear Stocks to Watch
Monday, several nuclear stocks jumped amid news of a U.S. House panel on Wednesday. Meanwhile, President Trump has already signed four executive orders to deploy new nuclear reactors.
Oklo is one of the leading SMR stocks. The current technical pullback in shares to the rising 200-day moving average is nearly identical to the pullback that occurred in April (which led to an 8x return in the stock).
Image Source: TradingView
Centrus Energy ((LEU - Free Report) ): Helping the U.S. Decouple from Russia
Centrus recently received $900 million from the U.S. government to develop next-gen nuclear fuel, reducing the reliance on Russian uranium.
Constellation Energy ((CEG - Free Report) ): A Proven Entity
Among nuclear players, CEG has the most predictable revenue stream. Last year, CEG signed a landmark 20-year agreement to restart the abandoned “Three Mile Island” nuclear plant to provide carbon-free power for Microsoft ((MSFT - Free Report) ) data centers.
Bottom Line
As the AI race intensifies, the battleground has shifted from pure software to the physical infrastructure that powers it. The convergence of AI’s immense processing needs and the Trump Administration’s aggressive push for nuclear energy has created a unique “perfect storm” for the energy sector.
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Why SMRs will Play a Key Role in the AI Supercycle
Key Takeaways
AI: The Most Significant Breakthrough Since the Internet
Whether it is large language models, healthcare, software, shopping, or education applications, artificial intelligence is becoming the most significant technological breakthrough since the internet, and arguably the largest in history. In addition to the benefits of its practical uses, the artificial intelligence buildout will have economic and defense consequences. From a defense perspective, the impact is already being felt. For instance, Palantir ((PLTR - Free Report) ), the leader in AI defense and intelligence applications, is up ~1,800% since its 2020 IPO. Meanwhile, the country or countries that win the artificial intelligence race are likely to experience a productivity boom. Former Wall Street veteran and current Treasury Secretary Scott Bessent recently said, “There’s a very good chance with this AI boom that we’re seeing the productivity kick in as soon as the first quarter.”
AI Requires Immense Energy
Unsurprisingly, the two most competitive AI rivals are the two largest and most sophisticated economies: China and the United States. While most experts agree that the U.S. is off to a lead in AI technology, China enjoys a clear advantage in a critical aspect – energy. Data centers used to train AI models require immense power. For example, in 2022, the AI LLM data center share of total commercial electricity demand was just 3%. However, by 2027, the Energy Information Administration (EIA) expects that figure to leap to 12%.
Image Source: Center on Global Energy Policy
Nuclear: The Trump Administration’s Preferred Energy Source
The energy needs of the AI buildout are so vast that big tech companies will tap all forms of energy, including natural gas, coal, and solar. However, based on the Trump Administration’s actions, nuclear and small modular reactors specifically appear to be the energy source of choice. SMRs have several benefits, including:
· Off-grid capability: Instead of using the electrical grid, SMRs can function off-grid. Off-grid capability has two benefits: it does not drive up energy costs for local households, and the data center does not have to rely on the increasingly aging and unreliable U.S. electric grid.
· Clean Energy: Nuclear is considered “clean energy.”
· Pre-fabrication: SMRs are prebuilt in factories, requiring less on-site labor.
SMR Nuclear Stocks to Watch
Monday, several nuclear stocks jumped amid news of a U.S. House panel on Wednesday. Meanwhile, President Trump has already signed four executive orders to deploy new nuclear reactors.
Oklo ((OKLO - Free Report) ): Déjà vu?
Oklo is one of the leading SMR stocks. The current technical pullback in shares to the rising 200-day moving average is nearly identical to the pullback that occurred in April (which led to an 8x return in the stock).
Image Source: TradingView
Centrus Energy ((LEU - Free Report) ): Helping the U.S. Decouple from Russia
Centrus recently received $900 million from the U.S. government to develop next-gen nuclear fuel, reducing the reliance on Russian uranium.
Constellation Energy ((CEG - Free Report) ): A Proven Entity
Among nuclear players, CEG has the most predictable revenue stream. Last year, CEG signed a landmark 20-year agreement to restart the abandoned “Three Mile Island” nuclear plant to provide carbon-free power for Microsoft ((MSFT - Free Report) ) data centers.
Bottom Line
As the AI race intensifies, the battleground has shifted from pure software to the physical infrastructure that powers it. The convergence of AI’s immense processing needs and the Trump Administration’s aggressive push for nuclear energy has created a unique “perfect storm” for the energy sector.