A $295 billion opportunity is hiding in plain sight. 2 Stocks That Should Help You Get Started.

Last month, utilities Constellation energy unveiled plans to restart one of the two now-decommissioned nuclear reactors at the Three Mile Island power plant in Pennsylvania.

On the surface it doesn't mean much. The world needs more electricity now. Nuclear power is a quickly accessible and cost-effective option.

However, there was a curious detail in Constellation's press release. That means even though it will be connected to the national grid, the electricity it will generate will largely be dedicated to running AI data centers managed by the software giant Microsoft. The news underscores the fact that data centers are power-hungry, and more so the larger the company gets. Goldman Sachs assumes that data center electricity consumption will increase by 160% by 2030, but that is still early days.

However, restarting Three Mile Island's 800-megawatt reactor is only a stopgap measure. The future of nuclear power is likely to be defined by so-called small modular reactors, which are exactly what they sound like: nuclear power plants that are easy to build and inexpensive to manage. Perhaps most notably, they can be deployed very close to where the electricity they generate is consumed, rather than supplying their power via the grid.

Two special companies are poised to take advantage of this rapidly evolving opportunity.

Small modular reactors are the real deal

This is not just theoretical thinking either. Just last week alphabet as well as Amazon announced its intention to purchase electricity generated by small modular reactors (or SMRs) to power its AI data centers. Industry research firm Wood Mackenzie estimates that the SMRs already under construction will ultimately be able to produce over 22 gigawatts of electricity. That's enough to power over 16 million homes, or probably at least a whole bunch of data centers.

But even before the first of these power plants comes into operation, more are likely to be put into operation in anticipation of their success. IDTechEx reports that the annual SMR market will be worth over $72 billion per year by 2033, on track to reach $295 billion in 2043. That's an annual growth rate of 30%.

It almost sounds to fantastic. Last but not least, the complicated logistics of the SMR movement is a limiting factor.

However, there are many factors in favor of the small modular reactors, which are, however, much more powerful.

Image source: Getty Images.

These factors include, above all, the goals of CO2-neutral energy supply, which are developing into clear guidelines. While nuclear energy may have a bad reputation due to its high rate of catastrophic (or near-catastrophic) accidents, this is the case does work and may Be safe by using more modern reactor designs and better-informed standards.

Another driving force is the way and reasons why energy is generated and then used. Modular reactors are possible for on-site energy production at facilities such as mines, refineries and desalination plants, or even for heat production at smelters, many of which still burn coal.

SMRs are also particularly promising as a means of producing pure hydrogen, which is used in fuel cells to generate clean electricity. The stumbling block is exactly the amount of raw energy that is necessary to split water into its two atomic elements (hydrogen and oxygen). Nuclear energy makes a lot of clean energy available when splitting water molecules.

Two ways to play

So it's still a work in progress. However, the core opportunities are beginning to emerge. Two stand out from the others.

First, as nuclear energy production and consumption increases in the foreseeable future, the world needs more nuclear fuel – especially uranium-238. BMO Capital Markets expects global uranium consumption to rise nearly 3% per year through 2035.

This is not massive growth, but given that supply and demand dynamics support continued price increases, uranium prices can be expected to continue rising.

Uranium spot price data from YCharts

There are a handful of publicly traded uranium miners Uranium energy (UEC 0.47%) and Australia's diversified mineral miner BHP Group Limited. But perhaps your best bet is a company called Cameco (CCJ 0.34%). It is one of the world's largest suppliers of high-quality uranium, selling $2.6 billion worth of nuclear fuel last year and turning $339 million of that into net profits thanks to its low-cost operations. It also rests on nearly £500 million worth of material just waiting to be unearthed.

Small modular reactors are of course the other big opportunity. Nano nuclear energy (NNE 17.16%) And Oklo (OKLO 14.06%) Are there a few SMR manufacturers worth putting on your radar? A company called NuScale performance (SMR 1.98%)however, is arguably further along than any other company on the monetization front.

That optimism was not felt a year ago when Utah Associated Municipal Power Systems abandoned plans it had made with NuScale to build the nation's first SMR. However, it wasn't quite the condemnation of the idea that it was portrayed as at the time. NuScale is still working on nearly a dozen other small modular reactor projects – domestic and international – with steadfast partners.

The reward depends on the risk

There is of course a risk here.

Although nuclear energy itself is proven, small modular reactors are not; Would-be partners may take a wait-and-see approach, which drags out the adoption process. Additionally, while NuScale is the only company with an SMR design approved by the U.S. Nuclear Regulatory Commission for use in this country, this particular 50-megawatt reactor design is not the 77-megawatt version that NuScale Power uses ultimately want to offer. Even if the new model is approved, that approval will not come until mid-2025, clouding the optimistic argument.

However, waiting for absolute certainty before intervening also leaves money on the table. The time for recording on premises that are not completely gelled is before They become obvious opportunities. Once they are obvious, much of any potential gains are in the rearview mirror.

Of course, given the dynamics of the movement, we cannot rule out the possibility that a new name will emerge as an important player in the field of nuclear energy. Keep your eyes open for this possibility too.