Three Ways to Think About the Nuclear Power Boom

What was once unimaginable now appears to be a trend: the resurgence of U.S. nuclear power.

On Tuesday, the evidence came with another nuclear power expansion announcement as U.S. electricity capacity needs grow: Alphabet (GOOGL) signed a 20-year power purchase agreement with reactor operator Constellation Energy (CEG). Constellation said it will invest $4.3B to add 890 megawatts (MWs) of nuclear generation across multiple U.S. states.

The new MWs are significant, equaling “the output of several small modular reactors (SMRs) or one large new conventional reactor,” Constellation said. The deal suggests utilities may expand existing nuclear operations rather than build new, given the timeline and investment required to meet what Constellation cited in its press release for manufacturing, industrial electrification, and “digital infrastructure” demand that requires upgrades to turbines, steam generators, and digital control systems.

There are multiple angles investors and traders may consider watching as electricity demand rises, utilities seek financing, and picks-and-shovels companies work on multi-year nuclear project timelines. The risks associated with nuclear fuel and nuclear waste have caused public scrutiny. In addition, construction timelines for upgrades and new construction can be lengthy due to regulatory and construction permitting requirements.

Here are some of the companies with business exposure to parts of the nuclear-power supply chain; financial information is based on Tuesday’s close.

Power Producers: The Companies Selling Electricity

Constellation Energy (CEG), the largest U.S. nuclear operator, said its Alphabet agreement impacts 11 nuclear units it owns in Illinois, Pennsylvania, and New Jersey. Its full fleet has 55 gigawatts (GWs) of capacity fueled by nuclear, natural gas, oil, geothermal, hydro, wind and solar. The stock, up 12% Tuesday, is down about 15% year to date. See Higher Rates Ding Utilities as Power Investments Gain Traction

Vistra (VST) and Talen Energy (TLN) rose nearly 11% and more than 12% respectively Tuesday on the Constellation news. Each has nuclear power-generation assets and potential exposure to growing data-center electricity demand. Vistra has retail and wholesale electricity and power generation businesses. Talen sells electricity, capacity, and services into U.S. wholesale power markets. Vistra and Talen shares are each down about 0.5% year to date.

The Picks and Shovels Upgrading the Nuclear Fleet

Expanding nuclear power capabilities and building out the grid require heavy equipment, engineering services, fuel technologies, and more. Here are some of the players:

BWX Technologies (BWXT) supplies nuclear components and fuel technologies and is developing advanced reactor technologies. On Oct. 1, it announced it was awarded a $189 million contract for the manufacture of nuclear reactor fuel for the U.S. Navy. Its shares are down nearly 16% YTD.

Fluor (FLR), whose shares are up 31% YTD, has provided engineering, procurement, and construction services for more than 110 years. Earlier this year, Fluor contracted with X-energy to provide project planning and other services related to the development of four, 80 MW small modular reactors (SMRs); it could benefit if reactor development and plant upgrades accelerate.

GE Vernova (GEV) is the 2024 global energy spinoff from General Electric. Its power business includes gas, hydro, nuclear and steam; its wind business includes turbine blades; its electrification business includes grid solutions and power conversion and storage; and it provides related services.  In September, GE Vernova Hitachi Nuclear Energy (GVH) cited regulatory progress at a nuclear reactor in Oak Ridge, Tennessee as “an important moment for new nuclear in the United States,” the company said in a press release. GEV shares are up 57% year to date.

Uranium: Nuclear Reactor Fuel

Nuclear plants need uranium, which is the radioactive chemical element used as a fuel. Publicly traded uranium-focused companies include miners large and small, and nuclear fuel enrichment operators. In addition, there are exchange-traded funds that include the industry. See Standard Nuclear (STDN) CEO on U.S. Military Deal, Becoming Nuclear 'Gas Station'

As technology giants continue securing long-term power contracts, nuclear power producers are increasingly talking about themselves as AI infrastructure companies.

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