A.I.'s Energy Needs Go Nuclear—Literally!

The emergence of advanced artificial intelligence has not just changed the landscape of technology—it's also reshaping our energy demands in an unexpected way: nuclear power is making a comeback. From Google (NASDAQ:GOOGL) to Microsoft (NASDAQ:MSFT), tech giants are increasingly exploring nuclear energy to power AI, marking an unexpected new chapter for this energy source. This isn't about revisiting outdated nuclear behemoths; it's about leveraging modern, small modular reactors (SMRs) and advanced nuclear systems to handle the surging energy appetite of AI-driven data centres. Here's a closer look at why this partnership makes sense.

An Unexpected New Need for Nuclear Power

AI systems, particularly those involved in machine learning and data processing, are consuming staggering amounts of electricity. With AI operations expected to contribute to nearly 9% of U.S. energy consumption by 2030, companies like Google have realised the need for reliable and scalable energy sources. To meet the anticipated surge in power demands, tech firms are betting on nuclear—a surprising but efficient choice. Google has teamed up with Kairos Power to develop SMRs, aiming to bring these reactors online by the early 2030s to power their AI systems.

Microsoft, meanwhile, is pursuing a different nuclear route by seeking to revive conventional nuclear plants such as the Three Mile Island facility. This revival is driven by AI's soaring energy needs, and by the desire to find alternatives that are both environmentally sustainable and capable of supporting consistent power requirements.

Why Nuclear Power Makes Sense for AI

Why opt for nuclear power when renewables like wind and solar are rapidly advancing? The answer lies in consistency. While renewable energy sources are fantastic for reducing carbon footprints, they often suffer from intermittency issues—solar only works when the sun is shining, and wind power depends on suitable weather conditions. On the other hand, nuclear power provides a continuous and reliable energy supply, making it well-suited to power-hungry AI systems that need stable electricity for data crunching and analysis.
SMRs, in particular, are uniquely adapted to this new wave of energy requirements. Unlike conventional nuclear reactors, which are huge, cumbersome, and expensive, SMRs are smaller, faster to deploy, and capable of producing modular energy. They have a reduced carbon footprint and are more flexible in meeting localised energy demands, which makes them an ideal partner for data centres focused on AI.

Safety and Benefits of Modern Nuclear Power

One of the historical challenges of nuclear energy has been safety concerns. However, SMRs address many of the issues faced by traditional reactors. These advanced nuclear reactors are inherently safer due to their smaller cores and simpler designs, which reduce the risks of a catastrophic failure. SMRs also need to be refuelled less often, typically every 3-7 years, compared to every 1-2 years for traditional reactors. This increased safety, alongside improved efficiency, is driving new confidence in nuclear power's ability to meet AI's colossal energy requirements without a significant environmental toll.

Nuclear energy, being almost carbon-neutral, provides a critical advantage in helping companies reach their ambitious climate goals. Both Google and Microsoft are investing heavily in nuclear as part of their efforts to achieve net-zero emissions, which not only underscores nuclear's safety and benefits but also its crucial role in the future of sustainable energy for technology.

Nuclear Stocks to Watch

For investors intrigued by this trend, some key players are set to benefit from the renewed interest in nuclear power. Companies like Kairos Power (Private Company) are developing the SMR technology that Google is betting on, while Westinghouse (Owned by Brookfield Business Partners - BBUC) and Nuscale Power (NYSE:SMR) are other major names in the small modular reactor space.

Traditional nuclear companies such as Electricité de France (EPA:EDF) and Brookfield Renewable Partners LP (NYSE:BEP) are also involved in nuclear innovation, with potential upside due to their leadership in advanced nuclear projects.

Meanwhile, Microsoft has looked at reviving traditional plants, which might make operators with existing assets, like Constellation Energy Corp (NASDAQ:CEG), appealing prospects for investors looking at how traditional nuclear energy infrastructure could meet future AI needs.