From recent global financial news themes, the investment heat for nuclear energy and enriched uranium is essentially on par with "artificial intelligence," which has been at the top of the capital market since 2023. In the eyes of investors, 2024 is expected to be a year of "super harvest" for nuclear energy stocks and uranium resource stocks.

To accelerate the expansion and construction of new data centers to meet the explosive growth in the computing power demands of artificial intelligence and cloud services, American tech giants such as Amazon, Microsoft, and Google have all turned their attention to nuclear energy, which is both clean and efficient, and stable, to provide uninterrupted power 24 hours a day for their ever-expanding data centers. This has recently driven the stock prices of nuclear power concepts and uranium mining companies to rise continuously in the global stock market.

Since the meltdown of the Fukushima Daiichi Nuclear Power Plant in Japan, after more than a decade of "investment hibernation," nuclear energy, and the most core fuel of this energy source—uranium—have returned to the global investor's radar. Especially uranium, which can be said to be one of the "hard commodities" with the worst performance over the long term, has seen extremely low prices this year, with price performance only slightly better than the lithium prices that have been falling due to low demand for electric vehicles in recent years.

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Price meltdown—uranium is one of the worst-performing "hard commodities" this year.

Why is uranium so important?

Uranium is one of the most important fuels in nuclear energy production, especially uranium-235, which releases an enormous amount of energy through nuclear fission. In nuclear reactors, the fission chain reaction of uranium is precisely controlled to generate stable thermal energy for power generation. Nuclear energy, as an efficient and clean form of energy, is closely related to the physical properties of uranium and the fission reaction.

In nuclear power plants, the nuclear reactor is the core part, which is the device that obtains nuclear energy by controlling the nuclear fission chain reaction. In nuclear power plants, the nuclear reactor uses uranium-235 as the most core fuel, releasing a large amount of energy through the induced fission by slow neutrons. This energy is released in the form of thermal energy and generates steam by heating the coolant, driving the turbine generator to generate electricity.

Among them, enriched uranium is the most core component of the nuclear reactor in nuclear power plants. Uranium-235 is the only highly fissionable isotope that exists naturally, but it only accounts for a very small part in natural uranium (only about 0.7%). About 99.3% of natural uranium is uranium-238 (which is not easily fissionable), and the fissionable isotope uranium-235 only accounts for about 0.7%, which is not enough to maintain an effective chain nuclear fission reaction. Therefore, in order to effectively utilize nuclear fission in nuclear reactors, the content of uranium-235 usually needs to be increased to about 3% to 5% through enrichment technology, a process known as uranium enrichment.

The uranium fuel rods in nuclear reactors are usually made of enriched uranium material (enriched with uranium-235 content). In nuclear reactors, the nuclear fission reaction of uranium-235 releases thermal energy, neutrons, and gamma rays, etc. Enriched uranium used for nuclear power plants is usually referred to as low-enriched uranium (LEU), with a uranium-235 content between 3% and 5%, specifically for civilian-level nuclear power generation.

Tech giants have invested heavily in advancing the construction or restart of nuclear reactors, and recent research data shows that if companies focused on uranium mining do not massively mine new mines, the uranium market will soon face a severe supply shortage. Under the catalysis of the recent market's investment enthusiasm for nuclear energy and enriched uranium, the stock prices of mining resource companies closely related to the most basic resources needed for the restart or construction of large-scale nuclear reactors—uranium mines—have soared rapidly. Investors are embracing those uranium mining stocks that had fallen into hibernation with real money.If new mines cannot start up smoothly, the uranium market will face a severe supply shortage. In the US stock market, the price of the Global X Uranium ETF (URA.US), which tracks top uranium mining and enrichment companies globally, surged by more than 7% by the close of US stocks on Wednesday, with a rise of up to 26% since September, after a long period of low prices for the ETF.

US tech giants are tacitly embracing nuclear energy. With the widespread adoption of AI technology, especially large-scale AI models and AI applications like ChatGPT, data centers have become the most central facilities for efficiently processing and storing large amounts of data. The global craze for ChatGPT in 2023, the launch of the Sora Wen Sheng video model in 2024, and NVIDIA's unparalleled performance in the AI field for several quarters may indicate that human society is gradually entering the AI era starting from 2024. Large data centers can be considered the most central large-scale infrastructure projects of the AI era, which are crucial for the efficient operation of generative AI applications like ChatGPT and the iterative updates of AI models like GPT-4o.

Under the global trend of decarbonization in the current and foreseeable future, nuclear energy, as an efficient and stable clean energy source, has become one of the most favored sources of energy for tech giants such as Amazon, Google, and Microsoft. This energy source, which is clean, stable, and efficient, is expected to provide strong, uninterrupted power support for their vast data centers around the clock. Therefore, the support for nuclear energy from global politicians and tech companies may be stronger than at any time since the 1970s.

On Wednesday, tech giant Amazon announced that it would fund the construction of several small nuclear reactors in Washington State and invest in the nuclear energy startup X-energy. Previously, on October 14, Google announced that it had reached an agreement with the nuclear energy startup Kairos Power to purchase 500 megawatts of around-the-clock carbon-free electricity from Kairos' seven small modular reactors (SMRs). It is reported that the two companies are considering starting the first SMR delivery in 2030 and completing the full deployment by 2035.

Michael Terrell, Google's Senior Director of Energy and Climate, believes that adopting nuclear energy will complement Google's existing investments in solar and wind energy and help achieve net-zero energy goals. At the same time, he also emphasized that nuclear energy is a source of high-paying, long-term jobs. The US Department of Energy (DOE) estimates that expanding nuclear energy capacity to 2000 gigawatts by 2050 will require an additional 375,000 workers.

In September of this year, Constellation announced that it had reached a 20-year cooperation agreement with Microsoft to create the "Crane Clean Energy Center" and restart the Unit 1 of the Three Mile Island nuclear power plant. According to the agreement, Microsoft will purchase energy from the restarted nuclear power plant to help achieve its goal of using carbon-free energy to meet the power needs of data centers.

Achieving the goal announced at the COP28 climate conference in December last year, which is to triple nuclear power capacity by 2050, will be a daunting task. This requires the number of reactors built globally each year to be equivalent to the sum of the number of reactors built in the past 20 years. However, governments from countries that love nuclear energy, such as France, to those that are wavering, like Japan, to those that are anti-nuclear, such as Italy, are all going all out.

The US government's attitude has changed significantly.Nothing is more eye-catching than the comprehensive shift in the U.S. government's attitude towards nuclear reactors. Despite the continuous closure of nuclear reactors due to pollution incidents or operational difficulties over the decades, the United States still generates about 30% of the world's nuclear energy. The Palisades plant in Michigan closed in 2022 after nearly 50 years of operation, and is currently receiving up to $2.8 billion in federal funding to support the restart of its nuclear reactor. In June, a generator in Wyoming broke ground after the government and Bill Gates pledged $3 billion.

A large nuclear power plant at Three Mile Island in Pennsylvania had an accident in 1979, ending the "first atomic age" on a global scale. Currently, with the support of Microsoft and the U.S. government, it is restarting its long-dormant nuclear reactor, which is expected to provide uninterrupted nuclear power support for Microsoft's large AI data centers in the future. Another tech giant, Google, also cited similar supportive rhetoric as Microsoft when it announced an agreement with a startup company that hopes to build small modular nuclear reactors this week.

However, the vast uranium resources and enriched uranium from Russia may bid farewell to the Western world, which may be the driving factor for the U.S. government's attitude shift towards nuclear reactors. Russia occupies an important position in all aspects of uranium production, uranium enrichment, and the nuclear fuel supply chain, especially in the global uranium enrichment field, where Russia has considerable influence.

It is reported that the U.S. government's ban on importing enriched uranium from Russia officially took effect in August. Given the country's core position in uranium mining and enriched uranium manufacturing, the ban may further tighten the enriched uranium market, thereby promoting investors in the Western world to continue to pour into global uranium mining companies closely related to uranium mining outside Russia. In addition, Kazakhstan's domestic uranium production accounts for nearly half of the world's total. As its uranium tax has increased by a full two times, the country, which is crucial to global uranium production capacity, may further raise prices to offset losses.