The U.S. nuclear sector has been on a tear over the past couple of years, fueled by the global energy crisis, the clean energy revolution, and the AI boom, even as global electricity demand soars. Meanwhile, the uranium market is experiencing a structural supply deficit, creating potential challenges for nuclear operators. Unlike many commodities, uranium trading usually involves small volumes with specialized participants, making the nuclear fuel susceptible to significant uranium market volatility. Governments across the globe are repositioning nuclear as critical infrastructure rather than transitional tech. Nuclear stocks have gone ballistic, with nuclear and uranium equities re-rating sharply. The sector is on the move again after the U.S. Army unveiled the Janus Program on Wednesday, aiming to supply portable microreactors to military bases by 2028. The Janus microreactors will generate up to 20 megawatts of electricity without the need to be refueled constantly, an invaluable feature when operating in hard-to-reach areas. The energy capacity of these tiny reactors will be multiples higher than the ~800 kilowatts supplied by the biggest portable generators for the U.S. military.
Related: How Saudi Arabia Is Freeing a Million Barrels a Day for Export
“The U.S. Army is leading the way on fielding innovative and disruptive technology,” said Secretary of the Army Dan Driscoll. “We are shredding red tape and incubating next-generation capabilities in a variety of critical sectors, including nuclear power.”
Nuclear stocks have been selling off on the news, probably driven by profit taking after a wild run. Oklo Inc. (NYSE:OKLO) was trading -6.2% lower at 12.50 pm ET on Thursday, but has tucked on 1,285% over the past 52 weeks; Centrus Energy (NYSE:LEU) shed -4.1% on the day but +530.8% YTD, Energy Fuels Inc. (NYSE:UUUU) -7.0% but +349.9% YTD , NuScale Power Corp. (NYSE:SMR) -6.5% on the day but +181.% YTD, Uranium Energy Corp. (NYSE:UEC) -1.6% but +148.7% YTD, BWX Technologies (NYSE:BWXT) +2.8% on the day and +88.6% YTD, Cameco Corp. (NYSE:CCJ) -1.8% but 78.7% YTD, NANO Nuclear Energy (NASDAQ:NNE) -9.6% on the day but +93.0% YTD while Vistra Corp. (NYSE:VST) was flat on the day but has returned +53.4% YTD. Meanwhile, the nuclear energy benchmark, VanEck Uranium and Nuclear ETF (NYSEARCA:NLR) fell -2.3% in Thursday’s session but has returned 96.0% in the year-to-date, incomparable to the -0.3% YTD return by the oil and gas benchmark, the Energy Select Sector SPDR Fund (NYSEARCA:XLE).
While the Energy Department and the U.S. Army will be responsible for supplying uranium fuel for the Janus program, the microreactors will be owned and operated commercially. This will benefit companies like BWX Technologies (NYSE:BWXT). Eventually, small nuclear reactors may be licensed to other sectors, like power-hungry AI data centers. BWX Technologies designs, manufactures, and services nuclear components and provides nuclear solutions for a variety of sectors and uses, including naval nuclear propulsion, clean energy, environmental restoration, nuclear medicine, and space exploration, and they supply components, fuel, and services for both commercial and government-related nuclear applications.
That said, Wall Street is warning that the nuclear sector could be overheating. For instance, the market has bid up shares of Oklo, Nano Nuclear, and NuScale despite the fact that they are all development-stage companies with zero revenues. In July, Oklo unveiled a partnership with Liberty Energy (NYSE:LBRT)wherein they will develop an integrated power solution for data center applications, incorporating Oklo’s Aurora powerhouse with Liberty’s natural gas generation. The power plan will start with Liberty’s natural gas systems delivering quick energy. before shifting to Oklo’s clean nuclear generation over the long-term.
Around the same time, Oklo announced a partnership with Vertiv (NYSE:VRT) that will see them join forces to revolutionize data center operations. “This agreement is about delivering clean power, energy-efficient cooling, and infrastructure solutions purpose-built for AI factories, data centers, and high-density computers,” said Oklo CEO and co-founder Jacob DeWitte. Last week, Oklo revealed that it was selected for three of the U.S. Department of Energy’s reactor pilot projects, part of the DoE’s initiative to modernize and streamline nuclear licensing.
Bank of America has downgraded Centrus’ shares to Neutral from Buy but raised its price target to $285 from $210, citing valuation concerns after the huge runup. Centrus supplies low-enriched uranium (LEU) for existing reactors and is a leading developer of high-assay, low-enriched uranium (HALEU) for advanced reactors. Additionally, Centrus offers its technical and manufacturing capabilities for applications in advanced reactors, aerospace, and other sectors.
By Alex Kimani for Oilprice.com
More Top Reads From Oilprice.com:
Oilprice Intelligence brings you the signals before they become front-page news. This is the same expert analysis read by veteran traders and political advisors. Get it free, twice a week, and you’ll always know why the market is moving before everyone else.
You get the geopolitical intelligence, the hidden inventory data, and the market whispers that move billions – and we’ll send you $389 in premium energy intelligence, on us, just for subscribing. Join 400,000+ readers today. Get access immediately by clicking here.
