Is It Too Late to Join the Nuclear Trend?

The Rise of Nuclear Energy and Its Impact on the Market

The nuclear energy sector is experiencing a significant resurgence, with investors who entered the market early reaping substantial rewards. For instance, Lightbridge (NASDAQ: LTBR), a pre-revenue company, has surged by nearly 202% since its year-to-date low on January 14. Similarly, NuScale Power (NYSE: SMR) has climbed more than 177% from its YTD low on April 4. This upward trend raises an important question for those who missed the initial wave: Is this momentum likely to continue, and how can investors gain broad exposure without betting on individual companies?

The answer lies in the Range Nuclear Renaissance Index ETF (NYSEARCA: NUKZ). This fund offers a diversified approach to the nuclear energy sector, allowing investors to benefit from the industry’s growth without the risk associated with picking individual stocks.

Data Center Demand and the Nuclear Revival

One of the key drivers behind the nuclear energy revival is the increasing demand for data centers, fueled by the rapid development of artificial intelligence (AI). According to Apollo Chief Economist Torsten Sløk, despite a contraction in GDP during the first quarter of this year, data center construction contributed 1% to GDP growth. In early August, Fortune reported that data centers have become the most significant contributor to U.S. GDP, surpassing consumer spending.

This surge in demand is due to the insatiable need for AI technologies, which are creating a growing energy supply gap. As AI data centers consume vast amounts of electricity, many operators are turning to nuclear power, particularly small modular reactors (SMRs). Grand View Research estimates that the global AI data center market was valued at $13.62 billion in 2024, with a projected compound annual growth rate of 28.3% from 2025 to 2030.

The International Energy Agency highlights the potential of AI data centers to transform the energy sector. By 2030, global AI data center energy consumption is expected to reach around 1,000 Terawatt-hours (TWh), up from 250 TWh in 2020. In the U.S., the Department of Energy predicts that domestic energy usage from AI data centers will triple by 2028, rising from 4.4% of total electricity in 2023 to 6.7–12%.

The Role of Small Modular Reactors

Small modular reactors (SMRs) are playing a critical role in meeting these energy demands while supporting net-zero targets. Companies like Amazon (NASDAQ: AMZN) are investing heavily in SMRs as part of their strategy to achieve net zero by 2040. Alphabet (NASDAQ: GOOG) has also announced plans to purchase electricity from SMRs developed by Kairos Power.

As major tech companies pivot toward nuclear energy, the competition to meet AI-driven demand is intensifying. This shift underscores the long-term potential of the nuclear energy sector and presents opportunities for investors looking to capitalize on this trend.

The Range Nuclear Renaissance Index ETF

For those seeking a diversified way to invest in the nuclear sector, the Range Nuclear Renaissance Index ETF (NUKZ) offers a compelling option. While its expense ratio of 0.85% is higher than typical passive funds, it includes some of the leading names in the industry. The ETF's largest holding is Cameco (NYSE: CCJ), the world's largest uranium miner, followed by Constellation Energy (NASDAQ: CEG), which recently signed a 20-year deal with Meta Platforms (NASDAQ: META) to provide emissions-free nuclear energy.

Since hitting its YTD low on April 8, NUKZ has risen nearly 71%, and since its one-year low on September 6, 2024, the fund has gained over 93%. Although these gains may deter some investors, the ETF provides exposure to a high-growth industry that is set to keep pace with AI advancements.

Investment Considerations

Investors considering NUKZ should monitor the ETF’s Relative Strength Index (RSI). Currently, the RSI on the one-year chart reads 49.55, indicating a neutral position. If the ETF experiences a downtrend, it could test support levels around $55 or even $50 before entering oversold territory and potentially reversing.

For those looking for a better entry point, the current market conditions offer an opportunity to participate in the nuclear energy boom. With the right strategy, investors can position themselves to benefit from the sector's long-term growth.

Final Thoughts

The nuclear energy sector is gaining momentum, driven by the increasing demand for AI and the need for sustainable energy solutions. While early investors have seen impressive returns, there are still opportunities for those who enter now. By leveraging tools like the Range Nuclear Renaissance Index ETF, investors can gain broad exposure to the sector and position themselves for future growth.