Nuclear Energy’s Resurgence: A Goldman Sachs Report Illuminates a New Era

Once relegated to the sidelines in the race towards renewable energy, nuclear power is experiencing a significant resurgence, according to a recent report from Goldman Sachs. Driven by surging data center energy demands, innovative reactor designs, shifting government policies, and the need for energy security, analysts predict we are in the “early stages of a **nuclear renaissance in the U.S.**” Major technology companies like Microsoft, Amazon, and Alphabet are making substantial investments, paving the way for a future where nuclear energy plays a much more prominent role in the global energy mix. This shift represents a significant realignment in the energy landscape, with potentially far-reaching implications for the economy and the environment.

Key Takeaways: A Nuclear Power Revolution is Underway

• **Data center energy demands are booming**, projected to increase by 165% between 2023 and 2030, pushing “Big Tech” to invest heavily in diverse, low-carbon power sources, including nuclear.
• **Small Modular Reactors (SMRs)** are revolutionizing the nuclear energy sector, offering greater compactness and versatility than traditional reactors, making them ideal for powering data centers.
• Government support for nuclear power is **growing globally**, with countries reconsidering their stances and incorporating nuclear energy into their energy strategies to ensure stable and sustainable power sources.
• **Uranium sourcing remains a challenge**, with a significant portion of the global supply concentrated in a few countries. Addressing concerns about uranium sourcing will be crucial to the successful expansion of nuclear power.
• Companies like **Cameco Corporation** are exceptionally well-positioned to benefit from this renewed interest in nuclear energy, given their diversified position across the entire uranium fuel cycle.

The Rise of Nuclear Power in Data Centers

Goldman Sachs analysts, led by Brian Singer, emphasize the escalating energy demands of data centers. This explosive growth is forcing companies to diversify their power sources, with nuclear energy emerging as a key player. Singer stated, “**We continue to see Big Tech taking an all-in approach to sourcing power and pursuing low-carbon solutions.**” While renewable sources like solar and wind are expected to contribute significantly, their limitations in terms of land use and energy output are driving the interest in nuclear power. “**While we continue to assume renewables will meet only 40% of data center power demand growth through 2030, we see potential for a significant rise in nuclear’s share in the 2030s,**” Singer added. The significantly smaller land footprint required for nuclear power compared to solar is a key factor in its growing appeal.

Small Modular Reactors (SMRs): A Game Changer

The development of **Small Modular Reactors (SMRs)** is a pivotal element in this nuclear renaissance. These innovative reactors are more compact and adaptable than their predecessors, making them more suitable for deployment in various settings, including near data centers. Hyperscale cloud providers like Google, Amazon, and Microsoft have actively engaged in contracts for SMR technology, demonstrating their commitment to a low-carbon and reliable power supply for their expanding data centers. As the analysts note, “**The prospects of more localized, onsite low-carbon reliable power has led to a surge in contracting by hyperscalers to support the development of small modular nuclear reactors.”**

Beyond SMRs: Large-Scale Nuclear Projects Gain Momentum

The resurgence of nuclear power extends beyond SMRs. Large-scale projects are also experiencing renewed interest, with considerable implications. A prime example is Constellation Energy Corp.’s decision to restart a dormant unit at the Three Mile Island plant, secured by a contract with Microsoft. This event provides a telling indication of an emerging market trend. Goldman Sachs anticipates further growth in this domain, predicting, “**potential for approximately two additional plants to be brought online in the U.S.**” in the coming years. Singer commented, “**Recognition of accelerated power demand growth from utilities is leading to greater willingness to consider new large-scale reactors.”** This signifies a broader shift in business considerations regarding nuclear energy.

A Changing Policy Landscape: Governments Embrace Nuclear Power

The shift extends to governmental policies, signifying a global embrace of nuclear energy. Singer highlighted the growing international support, saying, “**We’re seeing greater support by governments across the globe.**” This includes countries previously hesitant about nuclear power, such as Switzerland re-evaluating its policy, along with bipartisan support and policy development in the United States and even proposals for nuclear integration in Australia by the opposition party. The recent COP28 agreement to triple nuclear capacity by 2050 underscores this global shift, a remarkable change in the perception of nuclear power globally. These changes underscore the increased political will and energy security issues that are driving the adoption of nuclear energy.

The Uranium Supply Challenge

While the resurgence of nuclear energy offers considerable advantages, challenges remain, notably in uranium sourcing. A significant portion of the global uranium supply (~50%) is controlled by China, Russia, and Kazakhstan, raising potential geopolitical concerns. In contrast, Europe and the Americas collectively account for around 30% of uranium production, but hold a larger share of conversion (56%) and enrichment capacity (41%). Addressing concerns related to supply chain security and achieving diversification is critically important. Singer explained, “**We expect greater clarity on rules and confidence surrounding uranium sourcing will be key to moving forward with a meaningful ramp-up in nuclear generation capacity in the U.S. and Europe.**” Overcoming these challenges will be paramount for continued success in this nuclear energy resurgence.

Cameco Corporation: A Key Beneficiary

Goldman Sachs identifies **Cameco Corporation (CCJ)** as a primary beneficiary of the nuclear revival due to its unique positioning across the entire fuel cycle. As Singer noted, “**We see Cameco’s positioning across the entirety of the fuel cycle as a key driver underpinning our constructive view on the stock.**” This implies that Cameco’s comprehensive involvement in mining, conversion, enrichment, and fuel fabrication makes it especially well-prepared to cater to both conventional and emerging nuclear technologies. The investment bank has issued a ‘Buy’ rating for Cameco, targeting a 12-month price target of $61, representing a potential 20% increase from current market levels. This enthusiastic outlook reflects the potential returns from Cameco’s unique exposure to the nuclear energy renaissance.