Investors may have thought that the technology sector’s wave of excitement and innovation would stop at the semiconductor industry as a support lever for artificial intelligence, but that’s far from the truth. The biggest names in technology are now looking to invest in alternative energy sources, primarily nuclear energy, as the next frontier of efficiency.
Amazon.com Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOGL), and Meta Platforms Inc. (NASDAQ: META) have something else in common other than all being part of the NASDAQ 100 index. These giants are slowly accepting that, as the global economy becomes digitized and data becomes the new oil, data center footprint and expansion will be needed sooner rather than later. However, today’s energy sources won’t be enough to cover this demand, so they’ve looked into nuclear.
This is why investors have an unmissable multi-year trend in their hands, and being on the right side of history with this development could turn out to be a life-changing investment opportunity. Keeping nuclear stocks in mind is key to riding this wave from the onset, which is why today, names like Cameco Inc. (NYSE: CCJ) and NuScale Power Co. (NYSE: SMR) should have a place in everyone’s watchlist moving forward before it’s too late.
Big Tech’s Plans for Nuclear Energy Adoption to Power Data Centers
Looking ahead, supporting the massive energy inputs needed to support data centers is a daunting task that won’t be achievable by today’s energy standards. Electricity grids often operate near capacity for everyday needs in the biggest cities of the United States, and the other alternatives just aren’t there yet.
In terms of capacity and efficiency, solar and wind energy won’t be able to keep up, especially considering that their nature is intermittent, meaning you won’t always have windy or sunny days. That being said, the next clear alternative becomes nuclear, despite not being as developed and scaled up yet.
Understanding the nuclear landscape could take days if not weeks, so keeping up with Microsoft Inc. (NASDAQ: MSFT) and its own round of nuclear investments can help investors keep up, as its former CEO Bill Gates has put out a lot of literature on the issues and opportunities surrounding nuclear power.
That being said, here’s what these two contenders for the new nuclear wave look like in the eyes of the market and Wall Street.
Ray Dalio and the Market See Upside Potential in Cameco Stock
When Bridgewater Associates, the world’s largest hedge fund, and its leader, Ray Dalio, take on a position, investors better know that they are in for one long ride. Dalio’s philosophy is a global macro approach, buying stocks and other assets that fit his view of the world not a couple of years from now but a few.
His hedge fund boosted its stake in Cameco stock by 19.9% as of November 2024, netting their investment to a high of $118.4 million today. While it may not sound like such a big position, there is reasonable evidence to believe that it carries high conviction behind it.
Why? The stock is now trading at a new 52-week high, which means two things. First, bullish momentum is backing this stock and its future upside. Second, anyone willing to buy at these highs has to be confident that the ceiling is not close to where the stock trades today.
Investors can look to Wall Street analyst opinions to figure out where this ceiling is. As of today, the consensus price target of $66.6 calls for a 9% upside from today’s prices. However, there have been those willing to go above the consensus and stay there since August of this year, and no change is sometimes good news.
Analysts at Scotiabank placed an “Outperform” rating on Cameco stock back then, and have kept both this rating and their valuations for $80 a share, calling for a much higher upside of up to 31.2% from today’s price, and another new high.
NuScale Stock Attracts Premium Pricing as Institutions Back Its Potential
Compared to the rest of the energy sector, NuScale stock trades at a price-to-book (P/B) ratio of up to 43.5x above the average of 7.8x. While some might call this stock expensive, others will understand that the market often overpays for names that are expected to grow at above average rates.
This belief is backed by current Wall Street earnings per share (EPS) forecasts. While still waiting to expect the company to post a net profit, analysts do think that the financials will narrow enough to get it close to breakeven. It’s important to note, however, that these assumptions do not yet reflect the growth in data centers and their need for more efficient and available energy sources.
And that’s where institutions like State Street and Geode Capital Management see an opportunity, as they both boosted their holdings in NuScale stock by a respective 10.2% and 21% in the beginning of November 2024. This new addition nets their investments at $19.4 million and $21.2 million for each, a vote of confidence to consider.
Ultimately, the fact that the stock now trades at 75% of its 52-week high would offer these institutions and retail investors alike a chance to get behind this stock at a better price, knowing that the trends for nuclear energy are starting to take on momentum today.
