Uranium stocks rose this week at AI News

Nuclear stocks have become a hot topic in the news this week as political forces have pushed to expand nuclear production and technology companies have indicated their willingness to be buyers.

According to data provided by S&P Global Market Intelligence, Uranium Energy Corp. (UEC -3.52%) increased by 26.1%, Cameco Corp. (CCJ -1.68%) increased by 11.1%, American superconductor (AMSC -0.60%) increased by 23.5% and NuScale Power (SMR 8.92%) was the big winner, climbing 44.1% this week. Shares are trading up 20%, 8.5%, 19.3% and 37.1%, respectively, as of 1:30 PM ET on Friday.

Image source: Getty Images.

Politics takes center stage

While politics isn’t something investors should put too much value on for long-term investing, this week has been particularly important as both presidential candidates have been very bullish on both domestic energy production in USA, more specifically nuclear energy.

Nuclear power has a unique multi-spectrum winning position for policymakers. It is a domestic source of energy, which could reduce the import of foreign oil, and it is a clean source of energy. The challenge is that it is not popular to develop because some residents do not want to live near a nuclear power plant.

Oracle is betting on nuclear power

This is where the tech industry’s investment in AI data centers could be a boom for the nuclear industry. Oracle CEO Larry Ellison said he is building a data center that will be powered by three small nuclear reactors.

Ellison would not say where the data center is located, but indicated that building permits are in hand. What is not clear is if or when the small nuclear reactors will be operational. Small nuclear reactors are not expected to be commercially available until the 2030s, so this announcement may be ahead of itself. But that hasn’t stopped the market from being optimistic about the technology’s new, energy-consuming needs.

Is Russia restricting exports?

Adding fuel to the fire, Russian President Vladimir Putin said on Wednesday that export restrictions on uranium, titanium and nickel could be imposed in retaliation for Western sanctions. The US is one of the largest importers of uranium, so this could boost demand for companies like Cameco and Uranium Energy.

A bright future, but when?

There seems to be momentum behind the nuclear industry at the moment, but it takes time for the momentum to translate into revenue. And this is the challenge that all these companies face.

As uranium suppliers, Uranium Energy and Cameco could benefit if Russia cuts exports and the price of uranium rises, but that trend could quickly reverse as supply chains adjust.

While new data centers may use American Superconductor’s efficient transmission technology or NuScale Power’s small modular reactors, it will be years, if not decades, before many of these projects are built. Until then, it is speculative to think that a financial turnaround is on the horizon.

AMSC Cash and Equivalents Data (Quarterly) by YCharts

As much as I believe nuclear power will be an increasingly large part of our energy future in the US, these stocks are far too speculative to buy today, so I’m going to call it quits and watch from the sidelines.