Chief Investment Strategist, The Freeport Society
Hello, Fellow Navigator.
Artificial intelligence is going nuclear.
Of course, when I hear “artificial intelligence” and “nuclear” in the same sentence, my first mental image is the apocalyptic world of the Terminator in which Skynet becomes self-aware and then immediately decides to nuke humanity. (And frankly, if Skynet spent even five minutes browsing X/Twitter or TikTok, you couldn’t fault it for reaching that conclusion.)
The reality isn’t quite so scary.
Microsoft (MSFT) and Constellation Energy (CEG), one of the largest electric power generators in the nation, made a splash last week by announcing an agreement to reactivate a mothballed unit of Pennsylvania’s Three Mile Island nuclear plant by 2028. And no, don’t worry. It’s not the one that melted down in 1979.
Microsoft, along with every other major tech player, needs a massive amount of juice to make its AI vision a reality. And a reactivated Three Mile Island unit would power a large chunk of the company’s AI data centers.
The move would bring 800 megawatts back onto the grid. To put that in perspective, that’s greater than the amount of power supplied by the Hoover Dam.
It won’t be the last nuclear plant brought back from the dead. Already, NBC reports that decommissioned nuclear plants in Michigan and Iowa are being considered for reactivation, and a “half-dozen other states are reversing moratoriums on new nuclear plants.”
They’d better hurry…
- Microsoft and BlackRock (BLK) just announced they’ll be plowing $100 billion into new data centers, bolstering AI infrastructure.
- Earlier this year, Alphabet (GOOGL) made a similar announcement, with plans to spend over $100 billion of its own cash toward AI development.
- And Amazon (AMZN) expects to spend $150 billion in data centers over the next 15 years, with a focus on enhancing AI capabilities.
All of this will require an insane amount of energy.
Surging Energy Needs
For instance, generating a single AI image consumes roughly the equivalent amount of energy as fully charging your smartphone’s battery from 0% to 100%. Consider how many AI images you’ve seen scroll across your screen today alone.
Just three years from now, AI applications are expected to consume between 85 and 134 terawatt hours per year, or roughly the energy consumption of the Netherlands. And it will only rise from there as the technology continues to rapidly evolve and new applications emerge.
There is no reality in which solar and wind energy satisfies this massive new surge in demand. And traditional oil and gas are politically dicey due to the environmental, social, and governance (ESG) mafia’s stranglehold on policy.
That leaves nuclear energy.
Nuclear energy is, hands down, the most efficient energy source currently available at any commercial scale. Per the Energy Department’s Office of Nuclear Energy,
Nuclear energy is America’s workhorse.
It’s been rolling up its sleeves for six decades now to provide constant, reliable, carbon-free power to millions of Americans…
As you can see, nuclear energy has by far the highest capacity factor of any other energy source. This basically means nuclear power plants are producing maximum power more than 92% of the time during the year.
That’s about nearly 2 times more than natural gas and coal units, and almost 3 times or more reliable than wind and solar plants.
Capacity Factor by Energy Source
Source: U.S. Office of Nuclear Energy
Of course, the reason this is true is that nuclear plants are “always on,” unlike renewable plants, which depend on the sun shining or the wind blowing.
And nuclear energy is more efficient than even natural gas and coal… plus, it doesn’t produce the carbon dioxide emissions that cause the ESG mafia to clutch their pearls.
The United States gets about 19% of our utility-scale electricity from nuclear, slightly less than the 21% we get from renewables. On the other hand, France gets fully 70% of its electricity from nuclear energy, and several other European countries get well over 40%.
It is insanity that we don’t use nuclear energy to supply literally 100% of the grid.
The widespread abandonment of nuclear energy over the past four decades will likely go down in history as one of the stupidest policy decisions in American history. President Joe Biden bears his share of the blame, of course, as he went “all in” on his Green New Deal and prioritized wind and solar above all else.
But he certainly wasn’t alone. The last time nuclear energy was a priority, Jimmy Carter was still in the White House.
Thankfully, that’s changing…
Opportunities in a New Era
Back in July, Biden signed the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act into law. This is America’s reentry into nuclear energy, and it creates the framework and the incentives for a massive new rollout of nuclear power plants both at home and abroad.
A boom in AI means a boom in nuclear energy demand… which in turn means a massive increase in demand for nuclear fuel.
If you’re looking for a quick and easy way to play this trend, pick up a few shares of the Global X Uranium ETF (URA). It’s a collection of the world’s major publicly traded uranium miners.
The rebirth of nuclear energy sits at the crossroads of no fewer than three of the macro trends I cover in The Freeport Investor. It (1) bucks the dogma of the ESG mafia while (2) paving the way for the rebuilding of America’s industrial empire by using (3) the exponential progress of new technology.
The paid-up members at The Freeport Investor are already positioning themselves to capitalize on these ever-changing trends. To find out more on how to join, and for some guidance while navigating uncertainty ahead, click here.
To life, liberty, and the pursuit of wealth,