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With soaring demand for AI and reliable energy generation, the focus on nuclear power to meet those energy demands is increasing. Being an essential component in sustainable and reliable energy generation, the growing interest in nuclear energy is driving a bullish outlook for uranium.
Tech giants are looking at nuclear power to fuel energy-hungry data centers to train and operate large-scale AI models used in today’s generative AI applications.
Data centers are energy-intensive, with AI applications consuming even more energy than traditional computing. As a result, most tech giants are shifting toward renewable energy to meet their growing energy needs and are increasingly exploring nuclear energy as a power source.
Uranium Set for a Demand Boom
Uranium demand is poised to surge, driven by the increasing need to power energy-hungry data centers and economies looking to meet clean energy goals. With AI taking center stage and tech giants increasing their investments in the United States, companies are entering into deals for data centers to meet their energy needs.
Per a recent report by the World Nuclear Association (WNA), over the next five years, demand for uranium for nuclear reactors is projected to surge nearly 30%, driven by governments adopting nuclear energy to meet carbon-free targets. As quoted on Reuters, the report states that uranium demand is expected to more than double from the current levels by 2040.
Nuclear Power Wins Trump’s Favor
Per the director of the U.S. Energy Dominance Council, Jarrod Agen, as quoted on Reuters, the Trump administration favors nuclear power over wind and solar and is willing to offer greater support through loan guarantees and tax incentives.
Agen positioned nuclear power as a long-term bet, noting that early investment is essential for securing an advantage. Per the Reuters article, Agen added that expanding nuclear capacity forms the third pillar of the Trump administration’s strategy to win the artificial intelligence race against China.
President Trump has repeatedly emphasized his ambition to make the United States the global leader in AI. With the global AI market projected to surpass $1 trillion by 2031, the field is emerging as an increasingly attractive investment opportunity, driving up demand for uranium and nuclear power at the same time.
SMRs Powering Nuclear Growth
As global economies push for a transition to cleaner energy sources, the demand for nuclear reactors is growing. However, high costs and project management have always been areas of concern affecting large nuclear plants, often leading to budget overruns and delays.
The rising interest in small modular reactors (SMRs) could address these challenges, driving increased demand for uranium. This could help nuclear plants become smaller, simpler and easier to construct, speeding up the deployment of new plants to meet the rising clean energy demand.
According to the report by WNA, the rise of SMRs is also fueling the projected gains for uranium.
Uranium Prices Set to Take Off
Unlike other energy sources, uranium prices have a minimal effect on the overall cost of nuclear power generation, highlighting the inelastic nature of the metal’s pricing. This could result in sustained higher prices without dampening demand, supporting the upward price trajectory of the metal.
Uranium prices have been climbing since early August. It is currently priced at $76.5 per pound (as of Sept. 5). The metal can maintain its upward momentum, supported by robust demand and supply constraints.
Operational setbacks at two of the largest global uranium mines are tightening supply. According to Forbes, Cameco (CCJ - Free Report) warned of reduced output at its McArthur River mine. Kazakhstan’s Kazatomprom lowered its output forecast for the next year.
As quoted in the Forbes article, according to Morgan Stanley analysts, uranium prices could reach $87 per pound by Christmas. Meanwhile, Citi expects prices to hold near $80 over the next three months before climbing to $100 next year, with a potential upside to $125 if the bullish momentum continues.
ETFs to Consider
With an increasing focus on nuclear energy and uranium demand set to grow substantially, uranium ETFs are also an appealing strategic portfolio addition for the long term.
Investors can consider Global X Uranium ETF (URA - Free Report) , VanEck Uranium+Nuclear Energy ETF (NLR - Free Report) , Sprott Junior Uranium Miners ETF (URNJ - Free Report) , Themes Uranium & Nuclear ETF (URAN - Free Report) and RangeNuclear Renaissance Index ETF (NUKZ - Free Report) to capitalize on the uranium market's upside potential.
With a one-month average trading volume of about 3.37 million shares, URA is the most liquid option, offering investors easier entry and exit while minimizing the risk of significant price fluctuations, which is ideal for active trading strategies.
URA has also gathered an asset base of $4.14 billion, the largest among the other options. Regarding charging annual fees, URAN is the cheapest option, charging 0.35%, and is more suitable for long-term investing.
Performance-wise, URNJ outpaced other funds significantly, gaining 17.06% over the past month and 34.1% over the past three months. Over the past year, NKUZ outperformed the other funds, gaining 78.76%.
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Uranium Demand to Jump 28%: ETFs in Focus
With soaring demand for AI and reliable energy generation, the focus on nuclear power to meet those energy demands is increasing. Being an essential component in sustainable and reliable energy generation, the growing interest in nuclear energy is driving a bullish outlook for uranium.
Tech giants are looking at nuclear power to fuel energy-hungry data centers to train and operate large-scale AI models used in today’s generative AI applications.
Data centers are energy-intensive, with AI applications consuming even more energy than traditional computing. As a result, most tech giants are shifting toward renewable energy to meet their growing energy needs and are increasingly exploring nuclear energy as a power source.
Uranium Set for a Demand Boom
Uranium demand is poised to surge, driven by the increasing need to power energy-hungry data centers and economies looking to meet clean energy goals. With AI taking center stage and tech giants increasing their investments in the United States, companies are entering into deals for data centers to meet their energy needs.
Per a recent report by the World Nuclear Association (WNA), over the next five years, demand for uranium for nuclear reactors is projected to surge nearly 30%, driven by governments adopting nuclear energy to meet carbon-free targets. As quoted on Reuters, the report states that uranium demand is expected to more than double from the current levels by 2040.
Nuclear Power Wins Trump’s Favor
Per the director of the U.S. Energy Dominance Council, Jarrod Agen, as quoted on Reuters, the Trump administration favors nuclear power over wind and solar and is willing to offer greater support through loan guarantees and tax incentives.
Agen positioned nuclear power as a long-term bet, noting that early investment is essential for securing an advantage. Per the Reuters article, Agen added that expanding nuclear capacity forms the third pillar of the Trump administration’s strategy to win the artificial intelligence race against China.
President Trump has repeatedly emphasized his ambition to make the United States the global leader in AI. With the global AI market projected to surpass $1 trillion by 2031, the field is emerging as an increasingly attractive investment opportunity, driving up demand for uranium and nuclear power at the same time.
SMRs Powering Nuclear Growth
As global economies push for a transition to cleaner energy sources, the demand for nuclear reactors is growing. However, high costs and project management have always been areas of concern affecting large nuclear plants, often leading to budget overruns and delays.
The rising interest in small modular reactors (SMRs) could address these challenges, driving increased demand for uranium. This could help nuclear plants become smaller, simpler and easier to construct, speeding up the deployment of new plants to meet the rising clean energy demand.
According to the report by WNA, the rise of SMRs is also fueling the projected gains for uranium.
Uranium Prices Set to Take Off
Unlike other energy sources, uranium prices have a minimal effect on the overall cost of nuclear power generation, highlighting the inelastic nature of the metal’s pricing. This could result in sustained higher prices without dampening demand, supporting the upward price trajectory of the metal.
Uranium prices have been climbing since early August. It is currently priced at $76.5 per pound (as of Sept. 5). The metal can maintain its upward momentum, supported by robust demand and supply constraints.
Operational setbacks at two of the largest global uranium mines are tightening supply. According to Forbes, Cameco (CCJ - Free Report) warned of reduced output at its McArthur River mine. Kazakhstan’s Kazatomprom lowered its output forecast for the next year.
As quoted in the Forbes article, according to Morgan Stanley analysts, uranium prices could reach $87 per pound by Christmas. Meanwhile, Citi expects prices to hold near $80 over the next three months before climbing to $100 next year, with a potential upside to $125 if the bullish momentum continues.
ETFs to Consider
With an increasing focus on nuclear energy and uranium demand set to grow substantially, uranium ETFs are also an appealing strategic portfolio addition for the long term.
Investors can consider Global X Uranium ETF (URA - Free Report) , VanEck Uranium+Nuclear Energy ETF (NLR - Free Report) , Sprott Junior Uranium Miners ETF (URNJ - Free Report) , Themes Uranium & Nuclear ETF (URAN - Free Report) and Range Nuclear Renaissance Index ETF (NUKZ - Free Report) to capitalize on the uranium market's upside potential.
With a one-month average trading volume of about 3.37 million shares, URA is the most liquid option, offering investors easier entry and exit while minimizing the risk of significant price fluctuations, which is ideal for active trading strategies.
URA has also gathered an asset base of $4.14 billion, the largest among the other options. Regarding charging annual fees, URAN is the cheapest option, charging 0.35%, and is more suitable for long-term investing.
Performance-wise, URNJ outpaced other funds significantly, gaining 17.06% over the past month and 34.1% over the past three months. Over the past year, NKUZ outperformed the other funds, gaining 78.76%.