Goldman Sachs Sees ‘Early Stages of Nuclear Renaissance in U.S.’

Analysts Highlight Top Stock Poised to Benefit From Data Centers’ Energy Demand

Once sidelined in favor of renewable sources, Goldman Sachs analysts suggest we are in the “early stages of a nuclear renaissance in the U.S.” This shift is primarily driven by growing government support and significant investments from technology giants like Microsoft Corp. (MSFT), Amazon Inc. (AMZN), and Alphabet Inc. (GOOGL).

Nuclear Power’s Growing Role in Data Center Energy Demand

Goldman Sachs analysts, led by Brian Singer, highlight the mounting pressures of data center power needs, estimating a staggering growth of 165% by 2030 compared to 2023 levels. This surge in demand is motivating “Big Tech” to diversify their power sources, with a notable shift toward nuclear energy. Singer mentioned, “We continue to see Big Tech taking an all-in approach to sourcing power and pursuing low-carbon solutions.” He elaborated, “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.” The limitations of renewable energy sources such as solar and wind, which require substantial land, have rendered nuclear energy a compelling alternative. According to Singer, natural gas and nuclear power require a much smaller land footprint compared to utility-scale solar installations.

Small Modular Reactors (SMRs) on the Rise

Central to this nuclear resurgence is the development of Small Modular Reactors (SMRs), which offer a more compact and versatile alternative to traditional reactors. Major hyperscale cloud providers, including Google, Amazon, and Microsoft, have already signed multiple contracts for SMR technology, aiming to power their expanding data centers with low-carbon and reliable energy. “The prospects of more localized, onsite low-carbon reliable power have led to a surge in contracting by hyperscalers to support the development of small modular nuclear reactors,” the analysts noted.

In addition to SMRs, large-scale nuclear projects are also gaining traction. Constellation Energy Corp. (CEG) recently announced plans to bring back online a dormant unit at the Three Mile Island plant, backed by a “take-or-pay” power contract with Microsoft. The Goldman Sachs report suggests this could merely be the beginning, anticipating “the potential for approximately two additional plants to be brought online in the U.S.” over the next several years. Singer stated, “Recognition of accelerated power demand growth from utilities is leading to greater willingness to consider new large-scale reactors.”

Governments Rethink Nuclear Amidst Energy Security Concerns

The policy landscape surrounding nuclear energy is also changing, as countries around the globe seek stable and sustainable energy sources. “We’re seeing greater support by governments across the globe,” noted Singer. Countries such as Switzerland are reconsidering nuclear options, with bipartisan support emerging in the U.S. Additionally, even Australia’s opposition party has proposed integrating nuclear into the country’s energy mix. At COP28, a global agreement was reached to triple nuclear capacity by 2050—a significant indicator that the nuclear narrative is evolving.

Uranium Sourcing Challenges

Despite the growing momentum for nuclear energy, uranium sourcing remains a complex issue. Nearly half of the global uranium supply is controlled by China, Russia, and Kazakhstan. In contrast, Europe and the Americas only source about 30% of uranium production while holding 56% of conversion capacity and 41% of enrichment capacity. “We expect greater clarity on rules and confidence surrounding uranium sourcing to be vital for advancing meaningful nuclear generation capacity in the U.S. and Europe,” Singer explained.

Cameco Corporation Positioned To Benefit From Nuclear Revival

Among the companies well-positioned to gain from this nuclear revival, Cameco Corporation (CCJ) stands out. Goldman Sachs identifies Cameco’s extensive involvement across the fuel cycle as a critical driver underpinning their positive outlook on the stock. Cameco’s operations span mining, conversion, enrichment, and fuel fabrication, making the company a robust player in both traditional and emerging nuclear energy applications. In the latest analysis, Goldman Sachs holds a ‘Buy’ rating on the stock, projecting a 12-month price target of $61. This target implies a potential 20% rally from current market levels.

As both regulatory support and technological advancements converge, the nuclear energy sector is expected to play a pivotal role in meeting the power demands of a digitally driven world, marking a potential turning point in energy consumption and production.