The Trump Administration announced a $100 billion project to invest in AI infrastructure in the US.
The energy-hungry AI space has made nuclear energy one of the hottest industries on Wall Street.
Constellation Energy, BWX Technologies, Dominion Energy, Talen Energy and PG&E Corp. stocks look to gain.
On Jan 21, President Donald Trump unveiled a joint venture called “Stargate” with OpenAI, Oracle Corp. (ORCL) and Softbank. The project will create an artificial intelligence (AI) infrastructure, especially data centers in the United States.
The initial investment of $100 billion can go up to $500 billion in the next four years. This expenditure will be in addition to Softbank’s pledge of $100 billion in December to create AI infrastructure in the United States.
The energy-hungry AI space has made the nuclear energy one of the hottest industries on Wall Street over the past year. At this stage, it should prove fruitful to buy nuclear energy stocks with a favorable Zacks Rank.
The stocks are: Constellation Energy Corp. CEG, BWX Technologies Inc. BWXT, Dominion Energy Inc. D, Talen Energy Corp. TLN and PG&E Corp. PCG.
Strong Growth of AI-Powered Data Centers
AI-powered data centers are a booming industry now. On Jan. 7, Microsoft Corp. (MSFT) said that the company will invest $80 billion in 2025 into AI-enabled data centers to train AI models and deploy AI and cloud-based applications.
Data center’s growth is so enormous that giant operators like Microsoft, Alphabet Inc. (GOOGL), Meta Platforms Inc. (META) and Amazon.com inc. (AMZN) have already collaborated with nuclear energy producers in order to mitigate the need of massive electricity for data centers.
Bloomberg Intelligence estimates that generative AI spending will increase from $67 billion in 2023 to $1.3 trillion by 2032. UBS estimated that four U.S. technology giants that are members of the so-called “Magnificent 7” will allocate around $267 billion as capital expenditure on AI applications in 2025, suggesting a jump of 33.5% year over year.
A research report by Rystad Energy predicted that the combined expansion of traditional and AI-driven data centers, along with chip foundries, will increase the cumulative demand for U.S. electric power by 177 TWh from 2023 to 2030, reaching a total of 307 TWh. In December 2024, the US Department of Energy reported that data center energy usage will “double or triple by 2028,” after doubling over the past decade.
5 Nuclear Energy Stocks to Buy
These five nuclear energy stocks have strong potential for 2025. Each of our picks currently carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Constellation Energy Corp.
Zacks Rank #1 Constellation Energy is a leading energy company in the United States with a significant thrust on clean energy, especially nuclear energy. CEG’s strategic $5.1 billion capital expenditure through 2025 should help acquire nuclear fuel and increase inventory levels. CEG aims to eliminate 100% of greenhouse gas emissions leveraging on innovative technology.
In late 2024, Microsoft entered into a 20-year agreement with CEG to revive the Three Mile Island nuclear plant in Pennsylvania. The $1.6 billion investment aims to restart the reactor, which has been dormant since 2019, to provide carbon-free electricity for Microsoft’s expanding data centers.
Constellation Energy has an expected revenue and earnings growth rate of -7.9% and 11.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5% in the last seven days.
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BWX Technologies Inc.
Zacks Rank #2 BWX Technologies manufactures and sells nuclear components in the United States, Canada, and internationally. BWXT operates through two segments, Government Operations and Commercial Operations.
BWXT supplies precision manufactured components and services to the commercial nuclear power industry. BWXT offers technical, management and site services to governments in complex facilities and environmental remediation activities.
BWXT has landed deals and partnerships with the U.S. Department of Defense to help build a cutting-edge micro-nuclear reactor. It is also working alongside key commercial nuclear energy companies such as GE Vernova and SMR standout TerraPower.
BWX Technologies has an expected revenue and earnings growth rate of 9.9% and 5.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.5% in the last 90 days.
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Dominion Energy Inc.
Zacks Rank #2 Dominion Energy’s portfolio realignment and focus on regulated assets is evident from its investments in regulated infrastructure, which will boost its performance in the long term. Dominion aims to attain net-zero carbon and methane emissions from its electric generation and natural gas infrastructure by 2050. The company aims to cut emissions by 70-80% by 2035 from the level of 2005.
Dominion and its subsidiaries sell a substantial volume of energy produced under long-term power purchase agreements, which provide visibility of earnings. Dominion signed an MOU (Memorandum of Understanding) with Amazon to explore innovative development structures for enhancing potential Small Modular Reactor (SMR) nuclear development in Virginia.
Dominion Energy has an expected revenue and earnings growth rate of 9.5% and 22.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% in the last 60 days.
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Talen Energy Corp.
Zacks Rank #1 Talen Energy is an independent power producer and infrastructure company, which produces and sells electricity, capacity, and ancillary services into wholesale power markets in the United States.
TLN operates nuclear, fossil, solar, and coal power plants. TLN is also developing battery storage projects. Amazon has partnered with TLN in Pennsylvania to power its data centers with nuclear energy.
Talen Energy has an expected revenue and earnings growth rate of 18.6% and -54.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.7% in the last 30 days.
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PG&E Corp.
Zacks Rank #2 PG&E is engaged in the sale and delivery of electricity and natural gas to customers in northern and central California, the United States. PCG generates electricity using nuclear, hydroelectric, fossil fuel-fired, fuel cell, and photovoltaic sources. PCG serves residential, commercial, industrial, and agricultural customers, as well as natural gas-fired electric generation facilities.
PCG owns and operates interconnected transmission lines, electric transmission substations, distribution lines, transmission switching substations, and distribution substations, and natural gas transmission, storage, and distribution system consisting of distribution pipelines, backbone and local transmission pipelines, and various storage facilities.
PG&E has an expected revenue and earnings growth rate of 5.5% and 9.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.4% in the last 60 days.
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