Nuclear stocks rose in Wednesday morning trading. NuScale Power rose 33%, Oklo rose 28%; NANO Nuclear Energy rose 10%; Vistra rose 4%.
Days after Alphabet Inc. splashed into the world of nuclear energy with a new arrangement that will help power its artificial-intelligence data centers, Amazon.com Inc. is making a similar kind of move.
Amazon already had a deal with Talen through which the technology giant will make use of an existing nuclear reactor. But on Wednesday, the company took its embrace of nuclear further, as it said it would support the construction of new small modular reactors, or SMRs, in partnership with other players.
"SMRs are an advanced kind of nuclear reactor with a smaller physical footprint, allowing them to be built closer to the grid," Amazon said in a blog post. "They also have faster build times than traditional reactors, allowing them to come online sooner."
The agreement could have nuanced implications for nuclear stocks that have been some of the biggest gainers of 2024. Amazon's earlier arrangement is with publicly held Talen and involves an existing reactor, while Microsoft recently inked an arrangement with Constellation Energy Corp, which will see that company restart a Three Mile Island reactor. But Wednesday's Amazon announcement, and Google's from earlier in the week, involve the building of new SMRs.
Amazon now has an deal with Energy Northwest that will support the development of four advanced SMRs in Washington state. The company also said it's investing in X-energy, whose design expertise will factor into the Energy Northwest reactors, and it's working with Dominion Energy to look into the possibility of an SMR project in Virginia.
Google's announcement with Kairos Power also concerns SMRs. "The next generation of advanced nuclear reactors offers a new pathway to accelerate nuclear deployment thanks to their simplified design and robust, inherent safety," Google said in a Monday blog post. "The smaller size and modular design can reduce construction timelines, allow deployment in more places and make the final project delivery more predictable."
Hyperscale cloud companies increasingly are embracing nuclear as they look to power AI data centers, which require huge amounts of energy. The companies see appeal in nuclear as it's a "clean" energy source but one with more reliable supply than renewables like solar and wind. But there are only so many existing reactors out there, and building new traditional ones can be costly.
Companies with nuclear footprints have seen their stocks surge this year, with Vistra Corp. $(VST)$ the S&P 500's best performer of 2024 so far, up 237%. Constellation and Talen shares have also seen triple-digit gains. Constellation ranks fourth in the S&P 500 SPX on the year, while Talen isn't in the index but boasts even better stock performance.
Is Amazon's further support of nuclear power a good thing for those stocks? It's likely complicated.
After Google's announcement earlier in the week, Jefferies analyst Julien Dumoulin-Smith wrote that he saw Google's commentary as "cautious for the nuclear focused independent power producers (IPPs) as the bull thesis is entirely dependent on selling existing nuclear power for well above market prices."
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