The U.S. energy landscape is undergoing a significant transformation as AI-driven industries rapidly expand, and the demand for robust, reliable energy sources intensifies. Meeting these growing energy needs requires a combination of established and emerging solutions to power the digital infrastructure that supports AI technologies. With the resurgence of nuclear power and continued reliance on natural gas, the U.S. is poised to build a reliable energy foundation capable of meeting the increasing demand driven by AI, reshoring, and electric vehicle (EV) adoption.
This evolving energy landscape presents opportunities for companies involved in grid modernisation, energy infrastructure upgrades, and the supply chain supporting these advancements. Below, we explore the role of nuclear power and natural gas in the current energy strategy, followed by key stocks that stand to benefit from the U.S. energy boom.
Nuclear Power: A Key Solution for AI’s Energy Demands
One of the most notable developments in the U.S. energy sector is the resurgence of nuclear power as a solution to meet AI’s significant energy requirements. AI data centres, which are essential for handling advanced computations, consume massive amounts of electricity. Companies such as Amazon and Microsoft are taking proactive steps to secure reliable, clean energy sources for their operations. For instance, Amazon recently acquired a nuclear-powered data centre to support its AI initiatives, while Microsoft has partnered with Constellation Energy to reopen the Three Mile Island nuclear plant, providing a sustainable energy source for its data centres.
The rising demand for AI data centres, coupled with reshoring efforts in the U.S. and the widespread adoption of EVs, is driving large-scale grid upgrades and a renewed focus on building dependable base load power infrastructure. Nuclear energy, known for its consistent and zero-carbon output, has re-emerged as a cornerstone of this energy strategy. Government support, such as the U.S. Department of Energy’s loan to revive the Palisades nuclear plant in Michigan, signals a broader commitment to nuclear power as a key component of future energy policies.
Natural Gas: An Abundant and Reliable Partner
While nuclear power is gaining momentum, natural gas remains a crucial component of the U.S. energy mix. Its abundance, relatively low emissions, and ability to provide consistent base load energy make it a vital partner in powering AI technologies and supporting the broader economy. As a bridge between fossil fuels and renewable energy, natural gas ensures the grid’s stability while more intermittent sources like solar and wind are integrated.
The role of natural gas extends beyond AI-driven industries. Its capacity to meet the increasing demands of EVs and reshored manufacturing industries makes it a critical element of the ongoing energy transition. With substantial government and private investment in energy infrastructure, there are new opportunities for modernisation and expansion of the U.S. energy grid, ensuring it remains resilient as the energy landscape evolves.
A Boom in the Electrical and Industrial Supply Chain
The rapid growth of AI, combined with the reshoring of industries and increasing adoption of EVs, is driving a boom in the electrical and industrial supply chain. Upgrading the grid and building reliable base load power infrastructure represents a once-in-a-generation opportunity to overhaul global supply chains, particularly in the U.S.
Significant investments are already underway in key infrastructure projects, with companies involved in grid modernisation, energy transmission, and supply chain upgrades poised to benefit. Businesses that support nuclear energy, natural gas, and renewable energy projects are expected to see substantial gains as they play a central role in reshaping the energy landscape. The next section highlights a few key stocks positioned to capitalise on the U.S. energy boom.
Key Stocks to Watch in the U.S. Energy Renaissance
Several companies are strategically positioned to benefit from the resurgence of nuclear power and the increasing demand for energy infrastructure in the U.S. Here are some key stocks that investors should keep on their radar:
Sprott Uranium Miners ETF (NYSE: URNM)
The Sprott Uranium Miners ETF (URNM) provides investors with exposure to the uranium mining sector, a critical component of the nuclear energy supply chain. The ETF holds a diversified portfolio of uranium mining companies, including significant holdings in Cameco Corp., NAC Kazatomprom, and Sprott Physical Uranium Trust. As of Q2 2024, URNM had 38 companies in its portfolio, with the majority of exposure in materials and geographic diversification across Canada, Kazakhstan, Australia, and the U.S.
URNM tracks the North Shore Global Uranium Mining Index, focusing on companies dedicating at least 50% of their assets to uranium mining and related activities. With nations committing to tripling nuclear energy capacity by 2050, URNM is well-positioned to benefit from a market experiencing rising uranium prices due to growing global demand for clean, carbon-free power. The ETF’s performance has been robust, delivering a a strong return for the 12 months ending in June 2024.
Sprott Physical Uranium Trust (U.UN.TO)
The Sprott Physical Uranium Trust offers direct exposure to physical uranium, allowing investors to capitalise on rising uranium prices without dealing with the complexities of investing in mining companies. As global interest in nuclear energy continues to rise, uranium has become an increasingly valuable asset for powering sustainable energy solutions.
As of June 30, 2024, the Trust held 65.5 million pounds of physical uranium, valued at $5.615 billion. Despite some volatility in uranium prices, the Trust remains well-positioned to benefit from the long-term demand for uranium as nations expand their nuclear energy capacity to meet net-zero goals. This investment vehicle provides a unique opportunity to participate in the growth of the nuclear sector, which is central to achieving future energy objectives.
Uranium Energy Corp. (NYSE: UEC)
Uranium Energy Corp. (UEC), America’s leading uranium mining company, is strategically positioned to benefit from the resurgence of nuclear energy. UEC has operations across Texas, Wyoming, and New Mexico, with recent production restarts at its Wyoming Hub and Spoke In-Situ Recovery (ISR) platform. The company boasts the largest ISR resource base in the U.S. and has a significant presence in Canada’s Athabasca Basin.
UEC’s strategic focus on expanding its pipeline of low-cost uranium projects positions it as a key supplier of carbon-free fuel for nuclear power. The company operates seven ISR uranium projects, all with the necessary permits, making it one of the few new producers in the uranium market. Although UEC has faced financial challenges, its long-term growth prospects remain strong as demand for clean nuclear energy continues to rise.
Constellation Energy Corp. (NASDAQ: CEG)
Constellation Energy Corp., the nation’s largest producer of carbon-free energy, plays a critical role in the U.S. energy transition. The company supplies power to over 20 million homes and businesses, with a diverse portfolio that includes nuclear, hydro, wind, and solar resources. Constellation’s ambitious goal to eliminate all greenhouse gas emissions by 2040 demonstrates its commitment to driving the shift toward sustainable energy.
A significant part of Constellation’s strategy involves leveraging its nuclear fleet, the largest in the U.S., to maintain a steady output of clean energy. In collaboration with Microsoft, Constellation recently took steps to reopen the Three Mile Island nuclear plant, positioning itself as a leader in meeting AI-driven energy demands. The company’s solid financial results underscore its ability to generate consistent returns while expanding its clean energy initiatives.
The TAMIM Takeaway
The resurgence of nuclear power, coupled with the continued importance of natural gas, is reshaping the U.S. energy landscape to accommodate the growing demands of AI, reshoring, and electric vehicles. The infrastructure required to support this energy transition presents significant opportunities for investors, particularly in companies involved in grid modernisation, energy supply chain upgrades, and base load power infrastructure.
At TAMIM Asset Management, we believe that focusing on the “picks and shovels” of the energy transition—companies that provide essential tools and resources for large-scale infrastructure projects—offers a strategic way to capitalise on evolving energy policies and technological advancements. The U.S. energy renaissance represents a rare opportunity to invest in the future of energy, balancing traditional and emerging sources to achieve sustainable growth.
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Disclaimer: Sprott Uranium Miners ETF (NYSE: URNM) and Constellation Energy Corp. (NASDAQ: CEG) are held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time.
