Unleashing Consumer Growth with U.S.-Style Monetary Policies
Artificial Intelligence (AI) has highlighted our voracious demand for baseload energy, and the entire industry is waking up. The nuclear capacity that once served as an atavistic backup of sorts is now being rapidly consumed by hyperscalers like Microsoft and Amazon Web Services, marking a significant milestone in the energy landscape of our country.
Microsoft’s $16 billion, 20-year agreement to secure energy from the reopening of Three Mile Island provides an economic rationale for new nuclear builds in the U.S. This massive deal highlights how long-term contracts with Big Tech can generate satisfactory returns on equity for new builds, opening up new possibilities for capital and long-term nuclear planning beyond government intervention.
Google, another major player in the hyperscaler market, is likely eyeing similar deals as it looks to remain competitive. Meta’s Mark Zuckerberg has acknowledged that energy could be the next bottleneck for AI growth, and the large tech companies are simply getting ahead of it to secure their energy needs. Meanwhile, Apple, working with rapidly expanding OpenAI (ChatGPT), will also face insatiable energy demands. The search for robust, high-density energy sources is intensifying.
While global banks have already committed $5 trillion to sustainable infrastructure over the next decade, AI is driving a clear business case for clean nuclear power, which offers the highest energy density available for the energy-hungry tech sector.
This shift opens the door for new business opportunities. Increased nuclear capacity could support new exahash growth for bitcoin miners at highly sustainable per megawatt-hour costs and could make electric vehicles a more viable sustainable energy form. Nuclear energy is crucial to ensuring energy abundance and productivity in the U.S., and the race is on for global leadership.
However, new nuclear projects will take years to build, and the industry’s learning curve is currently steep. Yet Microsoft’s long-term commitment in the Three Mile Island deal shows that new nuclear construction is now economically viable. The need for more baseload energy is undeniable, and nuclear is emerging as the preferred solution. This is stellar news for America.
From an investment perspective, there is already a significant supply and demand imbalance for uranium. With disappointing production news from Kazakhstan, the U.S.’s bipartisan uranium stockpile reserve bill (intended to secure uranium away from Russian control) becomes even more critical. Combined with the Big Tech developments, upstream uranium investments are looking salacious.
As mentioned, the timeline for new nuclear capacity to come online is long, taking years. With Big Tech absorbing the remaining nuclear availability and the U.S. phasing out coal, this nuclear news is bullish for natural gas producers over the next decade. The U.S. will need to rely heavily on natural gas until more nuclear facilities are operational.
While AI has shone a light on the growing need for baseload energy, the next major energy catalyst could come from oil. When the market realizes that the Permian Basin—the last stronghold of U.S. production growth—is finite and growth nearing exhaustion, oil could trigger significant market shifts, with wide-ranging implications, especially for interest rates and valuations.
In short, don’t mess with America. Nuclear is back, and owning energy is likely one of the most portfolio proof allocations over the next few years
Related posts
