Nuclear Energy: A New Power Source for Tech Giants as AI Demands Surge
Chicago, IL – December 23, 2024 – Zacks.com has released its latest stock highlights in the Analyst Blog. The Zacks Equity Research team discusses current news and events affecting the stock market. Featured companies include Amazon AMZN, Alphabet GOOGL, Microsoft MSFT, and Meta Platforms META.
Insights from Friday’s Analyst Blog:
Nuclear Energy: The Future Powering AI Innovations
Artificial intelligence (AI) is reshaping industries at a rapid pace. However, its growth comes with significant energy requirements. Data centers, essential for AI operations, use vast amounts of electricity to handle complex calculations and maintain optimal temperatures for high-performance systems.
The increasing demand for energy-intensive data centers is straining existing power resources. A recent report by Gartner warns that power shortages could limit the operations of 40% of current AI and GenAI data centers by 2027, possibly impacting their growth and energy accessibility.
In light of these challenges, nuclear energy is emerging as a sustainable and reliable power solution. Unlike more conventional energy sources, nuclear energy provides consistent electricity with minimal carbon output, making it a suitable answer to AI’s rising energy needs.
Tech companies are now exploring nuclear power options for several reasons. Advanced nuclear technologies promise quick implementation, reduced costs, and a greener energy future. By investing in nuclear energy, these companies are ensuring the advancement of AI while also progressing towards a cleaner energy landscape.
Let’s examine this alliance between AI and nuclear energy and the tech leaders that are expected to benefit in 2025.
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We have selected four companies — Amazon, Alphabet, Microsoft, and Meta Platforms— that are leading the shift towards nuclear energy in 2025.
Amazon – A Zacks Rank #2 (Buy) stock, Amazon employs machine learning, natural language processing, and data analytics to improve its services across e-commerce, cloud computing, and logistics. Through its AWS (Amazon Web Services) division, it delivers advanced AI solutions globally. Check out the full list of current Zacks #1 Rank (Strong Buy) stocks here.
To address its growing energy demands, Amazon is set to support nuclear energy initiatives in 2025. The company plans to collaborate on Small Modular Reactors (SMRs), promising quicker construction and closer integration with the electrical grid.
In partnership with Energy Northwest in Washington, Amazon aims to develop four advanced SMRs that could generate up to 960 MW of clean energy, enough to power over 770,000 homes. Additionally, Amazon is investing in X-energy, a leader in next-gen SMR reactors, for use in this project.
Moreover, Amazon is collaborating with Dominion Energy in Virginia and Talen Energy in Pennsylvania to supply nuclear power for its data centers, reinforcing its commitment to a sustainable energy future.
The Zacks Consensus Estimate for Amazon’s 2024 earnings has risen by 2 cents to $5.19 per share over the last month, with AMZN shares increasing by 46.9% year to date.
Alphabet – Rated a Zacks Rank #3 (Hold), Alphabet, the parent company of Google, is a leader in AI technology development. As the demand for AI escalates, Alphabet is focusing on securing reliable energy for its data centers.
Recently, GOOGL confirmed a deal with nuclear startup Kairos Power to acquire 500 megawatts of electricity from seven SMRs by 2025. This agreement marks a significant step in integrating nuclear energy as a clean and scalable solution for its AI infrastructure.
The Zacks Consensus Estimate for Alphabet’s 2024 earnings remains steady at $8.02 per share over the past month, with GOOGL shares up 35% year to date.
Microsoft – Another Zacks Rank #3 stock, Microsoft is at the forefront of AI advancements, notably with its conversational speech recognition and natural language understanding technologies. Their models, like Turing and Azure, have set industry benchmarks.
To accommodate the rising energy demands of its AI operations, MSFT has also embraced nuclear energy solutions. In late 2024, Microsoft signed a 20-year agreement with Constellation Energy to revive the Three Mile Island nuclear plant in Pennsylvania. This $1.6 billion investment seeks to restart a reactor that has been inactive since 2019, supplying carbon-free electricity for Microsoft’s expanding data centers.
The Zacks Consensus Estimate for Microsoft’s fiscal 2025 earnings is steady at $12.93 per share, and MSFT shares have risen by 16.3% year to date.
Meta Platforms – As a Zacks Rank #3 stock, Meta Platforms, which owns Facebook, Instagram, and WhatsApp, uses AI technologies to enhance its platforms and user experience. With extensive data centers, META is turning to nuclear energy to meet its growing energy demands and advance its AI objectives.
Recently, Meta announced plans to issue a Request for Proposals (RFP) to find nuclear energy developers capable of adding 1-4 gigawatts of new nuclear capacity in the U.S., starting in the early 2030s. Partnering with developers to create nuclear power plants will help META diversify its energy sources to support its data centers while pursuing a sustainable energy future.
The Zacks Consensus Estimate for Meta’s 2024 earnings has increased by 0.4% to $22.68 per share over the past month, with META shares gaining 68.2% year to date.
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