A true 'nuclear renaissance' is taking shape, and these stocks could be big winners

By Hannah Pedone

Analysts see greater potential for companies that can generate capacity from existing sites instead of building new reactors

AI is driving up demand for nuclear power, as evidenced by Google's recent deal with Constellation Energy.

The nuclear-energy industry has been having a moment, but analysts say some companies look better positioned than others to capitalize on a wave of AI-fueled demand.

That artificial-intelligence companies are turning to nuclear energy isn't exactly new. But recently, technology giants have been striking nuclear deals that focus on "uprates," or an expansion of capacity for existing nuclear sites, rather than building new ones. Google (GOOG) (GOOGL) just signed one such deal with Constellation Energy (CEG) earlier this week, while Amazon.com (AMZN) inked a Constellation deal of its own last week.

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Meanwhile, on Monday, the U.S. Energy Department announced a $4.2 billion loan to Vistra (VST) to finance uprates and improvements to existing nuclear sites.

One big benefit of uprates is that companies like Google don't have to deal with the uncertainty that comes with building a new site, explained Gabriele Sorbara, a managing director at investment bank Siebert Williams Shank & Co.

So which companies can benefit most from further uprates? Tim Winter, a portfolio manager at Gabelli Utilities, recommends a proven winner.

"The safest way in our opinion to play nuclear is Constellation," he told MarketWatch. Winter also likes Vistra, noting that the two companies are focused on building out existing capacity of large-scale nuclear power plants rather than constructing new small modular reactors (SMRs) the way NuScale Power (SMR) and X-Energy (XE) are.

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Jefferies analyst Julien Dumoulin-Smith explained in a note that there is more U.S. political support for uprates versus the construction of small modular reactors. He pointed out that, along with Vistra, the likes of Talen Energy (TLN), Public Service Enterprise Group (PEG) and Dominion Energy (D) have nuclear uprates available for sale.

Uprates also allow companies to recognize the benefits of their deals quickly because they're "not waiting for a new build," according to Sorbara.

For those who do want to bet on SMRs, Winter thinks GE Vernova (GEV) is one of the safer ways to play that trend. The company has a gas-turbine business in addition to "leading-edge" SMRs that will come online beginning in 2030, he explained.

"They're so successful in everything they do," Winter said of GE Vernova. "They have customers that trust them."

Regardless, investors likely haven't seen the last big deal, and that's driven meaningful recent gains for stocks tied to nuclear energy. Shares of Constellation and Vistra were up 17.9% and 20.5%, respectively, over the five trading days through Wednesday.

Melius Research analyst James West believes the market's positive reaction of late is justified, as "we are in the very early stages of a true, global nuclear renaissance," he said.

-Hannah Pedone

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10-08-26 0630ET