When they're not inventing sentient chatbots, tech giants have a new obsession: nuclear power. This week, Alphabet's Google and Amazon.com both announced investments in new kinds of reactors.
It's the latest sign that nuclear energy is making a comeback, some 50 years since the technology was last considered a growth industry. The trend had already lifted the stocks of companies that own reactors, including Vistra and Constellation Energy.
But the Google and Amazon deals signal a new phase where companies could actually build new nuclear reactors. As a result, a separate group of stocks has begun to rise -- companies that are designing, building, and fueling novel kinds of nuclear generators -- and they could keep gaining. That includes Nuscale Power, Oklo, BWX Technologies, GE Vernova, Lightbridge, and Centrus Energy, all of which rose last week.
On Wednesday, Amazon said it would finance the construction of several small nuclear reactors in Washington state and invest in Maryland start-up X-energy, which will build the reactors. The news came after Alphabet's Google announced on Monday that it had made a deal with privately held Kairos Power, a California-based developer of small nuclear reactors, to support the development and construction of several reactors. Financial terms weren't released, but Kairos expects to get the first reactor up and running by 2030 and potentially build several more by 2035.
The tech giants are looking for ways to secure power for their data centers, which are consuming more electricity as artificial-intelligence usage grows. The firms say they want to reduce their carbon footprints to slow global warming, and executives think nuclear fits the bill. Nuclear plants don't emit carbon and operate continuously, unlike solar and wind.
The biggest obstacles for nuclear adoption are that reactors take a long time to build and can be very expensive. A big one with 1,000 megawatts of capacity is likely to cost more than $10 billion, and the last set of reactors went an estimated $20 billion over budget.
The new kind of nuclear plants built by Kairos and X-energy are known as small modular reactors, or SMRs, and they're supposed to be cheaper and easier to construct. They produce about one-tenth as much power as the behemoths that exist today, and are called "modular" because they're designed to be built by factories in pieces.
Only three SMRs exist in the world today, and none are in the U.S. But there could be dozens by the 2030s. Congress passed a law this year meant to speed up approval of new SMRs, and the Biden administration said it would invest $900 million into helping companies build small reactors. The Inflation Reduction Act contains vital support for nuclear, too.
It's not easy to invest directly in the trend. Kairos and X-energy are privately held, but two other SMR developers are publicly traded. Oklo, whose chairman is OpenAI CEO Sam Altman, completed a SPAC merger earlier this year. Another player is Nuscale, which is the only SMR developer to have received approval for its design from the Nuclear Regulatory Commission.
Other nuclear companies, including Westinghouse, which is owned by Brookfield Asset Management and uranium miner Cameco, and nuclear equipment provider BWX Technologies have designed SMRs. GE Vernova, GE's publicly traded energy spinoff, is working on deploying SMRs in Canada. Investors can also buy uranium enrichment company Centrus Energy and nuclear fuel company Lightbridge, which works with Nuscale.
Until these new plants get off the ground, the trade should be considered speculative. Other U.S. nuclear "renaissances" have petered out because of costs or safety concerns. But with Big Tech and government joining forces, this one is looking more likely by the day.
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