Data Centers Create a Bull Case for These Nuclear 3 Stocks

Key Points

• The growth of data centers will inevitably create new demand for energy sources outside of the current infrastructure, an opportunity.
• Nuclear stocks may be called upon as a reaction to this need, where three stocks come into play.
• Wall Street analysts and the entire market are willing to bet on the outcome for this list.

The next wave of upside for the technology sector is now found in the future of data centers, since the United States is absolutely focused on onshoring the artificial intelligence capacity and footprint in the coming years.

This requires significant investment from the biggest names in the chipmaking and semiconductor industry, and most of the market is likely taking this view right now.

The real opportunity may lie further down the road for investors eager to be early adopters of emerging trends. America’s current energy grid is ill-equipped to handle the surge in electricity demand that data centers will create.

This gap could pave the way for alternative energy sources to take center stage—fueling a long-term bull run with the potential to turn portfolios into lasting wealth.

With this theme in mind, some of the biggest players in nuclear energy have already seen additional price action and attention, names like Cameco Corp. NYSE: CCJ, Oklo Inc. NYSE: OKLO, and even NuScale Power Corp. NYSE: SMR are the ones likely at the front of the next earnings expansion, as the evidence in today’s list will make it clear for investors now looking to get in early.

Cameco Stock: Price Action & Growth Leader

In terms of price action, Cameco stock is the one that leads the pack in today’s list, as the stock now trades at 96% of its 52-week high. This extremely bullish momentum can be attributed to the broader market now attempting to price in the future financial and industry performance, as well as Cameco’s role in this theme.

Digging further into that view, investors can begin to justify this preferential treatment with recent earnings per share (EPS) figures, according to Cameco’s latest quarterly earnings results. While all of Wall Street expected Cameco to report $0.29 in EPS, the company surprised everyone by a wide margin with its actual $0.51 in reported EPS.

This massive beat, however, could only be the beginning, considering how important nuclear energy may become in the coming years as data centers get rolled out across the United States. As a uranium provider, it's logical that Cameco would be the first to benefit from financial expansion and market attention, but there’s more to it.

Wall Street analysts currently rate Cameco stock Buy and have a consensus $82.6 price target, which represents roughly 6.6% upside from today’s prices. However, considering the recent financial figures, Royal Bank of Canada analyst Andrew Wong decided to stand out with an Outperform rating and an implied 42% upside in his $110 target.

Oklo Is a Premium Stock in the Making

Judging a company’s potential and true trajectory is challenging when it hasn't reported a net income yet. However, experienced investors understand that a lack of widespread market focus can reveal where the real opportunities exist. By analyzing Oklo stock’s valuation multiples against its peer group, the answer becomes evident. A price-to-book (P/B) multiple of 35.9x will place Oklo stock massively above the rest of the energy sector’s average valuation of only 4.0x today, and that is the sort of outlier data that professionals seek answers to.

This stock is trading at such a premium because Oklo directly provides fusion power (nuclear) solutions to customers and government entities within the United States, aligning it with the current administration's national security and domestic production objectives.

Knowing what lies ahead for all stocks as aligned as Oklo, short sellers decided to step off the gas a little bit. Over the past month, 1.2% of Oklo’s short interest declined as an initial sign of a bearish retreat. However, there are still $948.9 million worth of open short positions that could be wiped out if the stock rallies enough to force this buying pressure.

NuScale’s Government Favor

A newly established U.S. regulatory commission has issued fresh guidelines for the construction of small to medium-sized reactors. With its $11.2 billion market capitalization, NuScale has the agility to pivot its entire business swiftly and make adjustments without significant structural hurdles.

This is why NuScale has developed the proper designs and measures to secure new government and infrastructure contracts. With the massive energy demands that data centers will bring on, NuScale will receive similar demand for its reactors to be built and used.

Like Oklo, NuScale has no net income to report. Still, as stated, the market is willing to express its optimism for future sales contracts.

Because NuScale stock trades at a price-to-sales (P/S) ratio of 229.6x, no other companies in the nuclear space come close.

The reason is that NuScale is already set up for massive sales growth ahead of it.