Analysts say the proliferation of artificial intelligence (AI) technology across several industries is increasing energy demand and boosting the value of nuclear stocks. AI is consuming increasingly larger amounts of energy and analysts see new nuclear energy opportunities thanks to the resultant spike in energy demand.
Alongside data centers run by tech giants like Google and Microsoft Corp. (NASDAQ: MSFT), AI technologies are causing electricity demand to soar and could potentially provide opportunities for growth in nuclear stocks, Mizuho research analyst Anthony Crowdell says. Speaking in a recent interview with BNN Bloomberg, Crowdell says that before the recent surge in American demand for electricity, demand was flat for around 15-20 years.
While most utilities reported demand growth numbers of zero to 1% just 2-3 years ago, Crowdell says utilities are now reporting demand growth numbers as high as 9%. The increased use of energy-intensive data centers and artificial intelligence technologies is largely to blame for the surge in energy demand. For starters, companies such as Microsoft and Google that deal in both technologies consume more energy than entire nations annually.
Many companies in the tech space are now using nuclear energy to power their energy-intensive data centers and AI research facilities. E-commerce retail giant and cloud provider Amazon recently announced that it planned to invest in small nuclear reactors to power its AI operations and data centers following a similar announcement from Google.
A Bloomberg News report also noted that Microsoft Corp. had partnered with Constellation Energy to use the Three Mile Island nuclear plant’s energy output to power its AI and data center operations. Bloomberg Intelligence estimates show that Microsoft will pay premium prices of at least $100 a megawatt-hour for carbon-free electricity from the Pennsylvania nuclear plant.
Jefferies LLC estimated the deal will cost $112 per megawatt-hour compared to $60 a megawatt-hour price for the solar and wind energy available in the same region. The fact that tech companies are willing to pay nearly double for nuclear energy shows the value of green energy that’s available 24/7. Using solar and wind would lower their energy costs significantly but their intermittent nature means they can’t be counted upon to provide energy round the clock.
Nuclear energy, on the other hand, doesn’t depend on environmental factors and can generate energy regardless of weather conditions, making it attractive to tech companies that have to keep their data centers and AI technologies running around the clock.
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