Artificial intelligence (AI) took the world and the stock market by storm in early 2023 and has not slowed down since. Investors have flocked to companies developing and producing chips to power AI models, to cloud companies building huge AI data centers, and even to software companies deploying AI applications.
However, the energy needed to drive all this innovation could become an increasingly hot topic in the coming years. According to estimates of Wells FargoElectricity consumption from AI technology could increase from 8 terawatt-hours in 2024 to 652 terawatt-hours in 2030. Nuclear power could help solve this challenge. Emissions could discourage the use of fossil fuels, and renewable energy remains too intermittent to rely on alone. That opens the door to nuclear energy, which is efficient and clean.
AI’s long-term energy needs could help drive growth for companies exposed to nuclear energy, so consider buying these three top nuclear stocks in January.
Uranium is the fuel used for nuclear fission and cameco(NYSE: CCJ) It is one of the main producers of uranium. The Canadian company accounts for approximately 18% of the world’s uranium supply and has controlling interests in uranium mines in Canada, the United States and Kazakhstan. The company is poised for long-term growth as big tech companies and entire countries look to nuclear power as a way to meet energy needs while reducing carbon emissions. For example, Metaplatforms It recently announced plans to source nuclear power to power its AI data centers, starting in the early 2030s.
CCJ (TTM) Income Data by YCharts
It is increasingly evident that nuclear energy is gaining momentum. According to the International Atomic Energy Agency, 63 nuclear reactors are currently under construction and demand for nuclear energy could grow to 2.5 times its current capacity by 2050. Additionally, geopolitical tensions, including the US ban on importing uranium from Russia, could further boost the business of Western producers like Cameco.
Cameco’s business has improved in recent years. Analysts estimate the company’s revenue will reach $2.3 billion in 2025. Assuming governments and corporations continue to support nuclear energy, these could be the early stages of a very long growth story.
Those who do not want a purely nuclear investment could consider Southern Company(NYSE: SO)one of the largest energy companies in the United States. Its core businesses include electricity generation and electric and natural gas utilities serving more than 9 million customers. Utilities produce reliable revenue streams because society’s energy needs never stop. Southern Company’s energy production also spans multiple sources, including gas, coal, nuclear power and renewable energy.
Southern Company has invested heavily in nuclear energy. It operates eight total power units across three plants, and its newest units were the first built in the U.S. for commercial operations in three decades. At the beginning of this year, microsoft and constellation energy signed a 20-year agreement to restart a nuclear power unit at the Three Mile Island nuclear station in Pennsylvania to power its data centers. This potential game-changer for the industry opens the door for Southern Company, located near Virginia, the data center capital of the country, to do something similar.
SO PE Ratio Data (Forward) from YCharts
Meanwhile, the stock offers a dividend yield of 3.5%, compensating shareholders for owning the stock. It’s not the cheapest earnings, at 20 times earnings, but it’s not unbearable for long-term investors, especially if AI tailwinds accelerate Southern Company’s long-term growth.
The former conglomerate General Electric was split into pieces and its energy business, Vernova(NYSE: GEV)Now it stands on its own. GE Vernova is a diversified clean energy technology company focused on clean energy generation, grid electrification, and wind and gas turbines. Its power generation business includes nuclear power, the supply of reactors, fuel, services and steam turbines for electricity generation.
Society is making a slow and steady transition from fossil fuels to cleaner energy alternatives. This shift will take many years, potentially positioning GE Vernova for a multi-decade growth opportunity. Management currently anticipates high single-digit revenue growth through 2028. GE Vernova is also investing a cumulative $5 billion through 2028 in research and development to drive long-term growth.
GEV PE Index Data (Forward) from YCharts
The stock isn’t cheap, with a forward price-to-earnings ratio of 124. However, analysts estimate the company will grow earnings by an average of 46% annually over the next two years, so that price carries strong growth of the profits. Investors unsure about buying here can nibble for now and buy more aggressively if the stock pulls back. That said, it’s hard not to like the stock’s long-term potential amid growing demand for electricity and a transition to clean energy.
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Wells Fargo is an advertising partner of Motley Fool Money. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions on and recommends Meta Platforms. The Motley Fool recommends Cameco and Constellation Energy. The Motley Fool has a disclosure policy.
The 3 Top Nuclear Stocks to Buy in January was originally published by The Motley Fool
