Recent developments highlight the growing reliance on nuclear power by major tech companies, particularly for AI data centers. Amazon and Alphabet have both signed long-term deals to secure nuclear-generated electricity, underscoring the industry's commitment to this energy source. Amazon agreed to a 20-year purchase from Constellation Energy's Calvert Cliffs Clean Energy Center in Maryland, while Alphabet made a similar commitment involving 11 facilities across Illinois, Pennsylvania, and New Jersey.
Constellation Energy (NASDAQ: CEG) is well-positioned to benefit from this trend, as it produces about 80% of the nation's nuclear power. However, its stock has already seen significant gains, making it an expensive investment with a low dividend yield. Analysts suggest that Cameco (NYSE: CCJ), a supplier of low-enriched uranium-235, may offer a better investment opportunity. The World Nuclear Association predicts that nuclear energy output could triple by 2050, with a notable ramp-up expected around 2030.
Cameco also owns 49% of Westinghouse, a key supplier of nuclear industry equipment and technology. Despite a recent stock jump following Alphabet's deal with Constellation, Cameco's shares remain about 35% below analysts' consensus target price of $125.75. The company's strategic position in the nuclear supply chain makes it a compelling option for investors looking to capitalize on the growing demand for nuclear power.