Nuclear stocks are soaring. Will Nvidia join the fray?
This biggest question in artificial intelligence is rapidly changing from how to use it to how to power it.
AI data centers demand massive amounts of power to run the compute necessary to make applications like ChatGPT work. In fact, powering its computers is the biggest cost for the AI start-up and industry bellwether OpenAI, showing how crucial it is for AI companies to find affordable energy.
In recent weeks, there seems to be something of a consensus forming on the question of affordable energy for AI: It’s going nuclear. Investors are rapidly lining up behind nuclear power stocks as big tech companies like Microsoft, Amazon, and Alphabet all forged deals to source nuclear power in recent weeks.
The best-performing stock on the S&P 500 is now Vistra Energy, an unregulated electric utility that owns and operates several utilities. Shares of Vistra and fellow unregulated utility Constellation Energy rose in recent weeks after Constellation signed an agreement with Microsoft to resurrect the Three Mile Island nuclear plant in Pennsylvania.
Image source: Getty Images.
Where Nvidia fits in the nuclear equation
Right now, no company in AI seems to be more influential than Nvidia (NVDA -4.72%). It dominates the market for data center GPUs, the chips that power applications like ChatGPT, and its revenue has skyrocketed since OpenAI launched its large language model.
Unlike Microsoft, Amazon, and Alphabet, Nvidia doesn’t operate a cloud infrastructure service so it doesn’t need to partner with a nuclear energy provider the way those companies do, but given that AI demand now makes up the bulk of its business, it’s in the company’s best interest to ensure that there is an adequate energy supply to run those AI data centers.
Now, Nvidia seems to be turning bullish on nuclear as well. CEO Jensen Huang said in a Bloomberg interview, “Nuclear is wonderful as one of the sources of energy, one of the sources of sustainable energy” in supplying data centers.
Will Nvidia invest in nuclear stocks?
Since Nvidia is at the center of the AI boom and its CEO has expressed support for nuclear power, the next logical question is if Nvidia will take the step of investing in a nuclear energy company.
Nvidia is already a prolific investor. The company acquired shares in publicly traded companies like Arm Holdings, Soundhound AI, and Serve Robotics, among others, and these stocks, especially the smaller ones, popped on news of Nvidia’s investment.
It’s unclear how the company might look to get exposure to the nuclear energy sector, but one of the more popular ways right now is through companies that specialize in small modular reactors (SMRs), which offers some advantages of traditional nuclear power because they can be scaled up and down easily according to energy demands. They’re also more affordable, in part, because they can be prefabricated and shipped to the site where they’ll be used.
SMR nuclear stocks have surged in recent weeks, including NuScale Power and Oklo, which is backed by OpenAI Founder Sam Altman, and NANO Nuclear Energy, which is developing micro-small nuclear reactors. None of those companies currently have material revenue, so investors should understand that SMRs are still largely a development-stage technology. There’s also TerraPower, a privately held company backed by Bill Gates, though it’s not expected to go public soon.
Given the attention from the big cloud infrastructure companies above, nuclear is gaining steam as the leading way to fill the expected gap in energy demand as it is a clean, though not renewable, source of energy.
Keep your eye on the three stocks above, as well as comments from Jensen Huang for more insight on Nvidia’s direction in nuclear.
Stocks like Soundhound and Serve Robotics soared on news of Nvidia’s investment, and that would almost certainly happen in the nuclear energy sector if Nvidia took a stake in one of the SMRs above or a company like it.
Considering Nvidia’s position in AI, I think it’s more likely than not that the company will invest in some kind of nuclear energy company.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Constellation Energy, Microsoft, Nvidia, and Serve Robotics. The Motley Fool recommends NuScale Power and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
