MW Hedge funds are piling into the nuclear sector, Goldman Sachs' analysis shows
By Louis Goss
Hedge funds are snapping up shares in nuclear power producers in a bid to capitalize on an anticipated surge in electricity demand from the artificial intelligence sector, according to a new Goldman Sachs' analysis of 697 funds with more than $3 trillion in assets under management.
Money managers continued adding nuclear sector stocks to their portfolios in the third quarter of 2024, even as they trimmed their positions in other power producers and infrastructure companies that might benefit from the AI boom, the analysis shows.
Nuclear power producers are expected to benefit from surging demand for electricity from the fast-growing artificial intelligence sector. Top tech companies including Meta Platforms $(META)$ and Google-owner Alphabet $(GOOGL)$ have previously suggested new nuclear facilities could help meet this surging demand.
The move into the nuclear sector by hedge funds in the third quarter saw Texan power producer Vistra Corp $(VST)$ take up a place on Goldman Sachs' Hedge Fund VIP list of money managers' most popular long equity positions.
Vistra Corp currently operates around 6.4 gigawatts (GW) of nuclear generation capacity in the U.S. including its Comanche Peak facility in Texas, its Beaver Valley plant in Pennsylvania, and its Perry and Davis-Besse facilities in Ohio.
Talen Energy Corp $(TLN)$, another independent power producer from Texas that owns and operates the 2.7 GW Susquehanna Steam Electric Station in Pennsylvania, also entered the ranks of Goldman Sachs' VIP list in the third quarter.
Earlier this year, in March, Amazon.com $(AMZN)$ subsidiary Amazon Web Services (AWS) struck an agreement with Talen Energy to acquire a data center powered by Talen's Pennsylvania nuclear facility for $650 million.
Hedge funds, more broadly, kept their wider exposure to AI-related themes stable in the third quarter as they separately cut their exposure to the semiconductor industry for the first time since the second quarter of 2022, Goldman Sachs' analysis shows.
The 'Magnificent Seven' mega-cap tech stocks held their position in the top ranks of Goldman Sachs' VIP list in what has helped U.S. equity long/ short funds generate gains of 14% in the year-to-date - sums more than double the typical annual gains made by hedge funds over the past 20 years.
-Louis Goss
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(END) Dow Jones Newswires
November 20, 2024 06:56 ET (11:56 GMT)
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