Why nuclear is the center of the stock market's energy trade in 2025

Business Insider

2 days ago

Nuclear energy stocks got a big boost this week after US Transportation Secretary and interim NASA administrator Sean Duffy announced plans to expedite a nuclear reactor on the moon.
The comments sent stocks such as Oklo, Nucor and Nano Nuclear Energy jumping, with the gains extending into Wednesday's session.
But it's more than seemingly one-off comments that's boosting nuclear stocks this year, and the alternative power source has become the hottest energy trade out there in 2025.
Nuclear power has come sharply into focus in recent years, with advocates including Tesla CEO Elon Musk and, more recently, the Trump White House.
A quick look at the energy sector reveals that nuclear energy is outpacing its peers. The VanEck Uranium and Nuclear ETF (NLR) is up almost 50% year-to-date, compared to the Utilities Select Sector SPDR ETF (XLU), which is up 13%, and the Energy Select Sector SPDR ETF (XLE), which is down about 1% this year.
Nuclear energy is riding the AI wave
It's hard to examine the growth of nuclear energy stocks in 2025 without talking about the role of nuclear in the AI boom.
AI demand has continued to skyrocket as companies have doubled down on capex plans in the space. Dizzying demand for data centers has created an equally enormous need for power. Goldman Sachs predicts that data center power demand will increase 165% by 2030.
That's sparked a search for alternative power sources to support the continued growth of data centers and AI.
"It was easy and fast to reactivate nuclear reactors to meet the growing demand for clean energy from data centers," said Alexander Lis, chief investment officer at Social Discovery Ventures. "Other energy sources were either less clean, like coal, or longer to build, like wind or solar."
Lis added that his firm considers this demand to be sustainable, as "many big tech companies have already announced their plans to use nuclear energy for their data centers." Last September, Constellation Energy said it would reopen Three Mile Island, with Microsoft set to purchase the power power generated by the site.
Eric Schiffer, chairman and CEO of The Patriarch Organization and a nuclear energy investor, echoed this sentiment, highlighting the role that it may play in helping the US achieve AI dominance.
"China [is] far more equipped right now from an energy platform perspective," he stated. "Nuclear is a critical piece to ensure we're staying at pace. You can't lose this race over an energy constraint."
An under-the-radar Trump trade
Schiffer and others believe that Trump's focus on AI will benefit nuclear energy stocks in the near term.
"The Trump administration's policy priorities to support AI advancement and the unleashing of American innovation has been centered around a deregulation focus and a markets-driven all-of-the-above energy strategy," said Jeff Le, managing principal at consulting firm 100 Mile Strategies. "It includes an audacious goal of quadrupling US nuclear energy capacity to 500 gigawatts by 2050."
Le added that Trump's recent executive orders put "nuclear reactor licensing, fuel reprocessing, and domestic production, at the top of its 'Energy Dominance' agenda."
The cumulative effect of already soaring demand for power from AI and Trump's turn away from renewables in the search for alternative power sources means nuclear has been a big winner this year.
Importantly for investors, Schiffer thinks this bullish period will continue for another 18 months or so.