One analyst says he sees opportunities in nuclear stocks based on the theme of rising electricity demand amid broader enthusiasm for AI and data centres.
Anthony Crowdell, a research analyst at Mizuho, said in an interview with BNN Bloomberg on Monday that electricity demand growth in the U.S. had been relatively flat for a period of around 15 to 20 years.
“Now all of a sudden you throw in this data centre AI thematic coupled with the onshoring of manufacturing here and now it’s been off to the races with utilities putting out demand growth numbers where again two to three years ago, we were zero to one per cent of demand growth,” he said.
“Now we have some utilities putting out numbers about nine per cent. So, it’s just a step? change in the amount of load growth that we need and also a change in the generation needs that are required to meet this new load.”
Last week, Amazon announced it would be investing in small nuclear reactors to meet power demands from data centres and artificial intelligence. The announcement came just days after a similar one from Google. Bloomberg News also reported last month that Microsoft entered into an agreement to pay a premium to Constellation Energy to source clean power from the Three Mile Island nuclear plant when it is restarted.
One of the companies Crowdell said he likes in the sector is Duke Energy.
“A great way to define Duke is aggressive defense. It’s one of the bellwethers in this space. It struggled for years, maybe with a weaker balance sheet and unregulated operations, (but) unregulated businesses are (now) all gone. It’s the cleanest this story has been in 20 years,” he said.
“They built a nice credit cushion with the balance sheet and they operate very well in all their jurisdictions.”