Big tech firms like Amazon are actively speaking with utility companies to build artificial intelligence data centers powered by clean, reliable nuclear energy. This move aligns with the 'Next AI Trade' investing theme, which was introduced to pro-subs in early April.
"The owners of roughly a third of US nuclear power plants are in talks with tech companies to provide electricity to new data centers needed to meet the demands of an artificial-intelligence boom," the Wall Street Journal says.
In particular, WSJ sources say Amazon Web Services is securing a deal with Constellation Energy, the largest owner of US nuclear power plants, to supply clean, reliable atomic power to a data center on the East Coast.
This is not the first time Amazon has negotiated with utilities about nuclear power.
In March, AWS purchased power provider Talen Energy's 1,200-acre data center campus, which is directly adjacent to its 2.5 gigawatt (GW) nuclear power at the Salem Township site in Luzerne County, Pennsylvania.
WSJ pointed out that tech companies demanding nuclear power for AI data centers "would be effectively diverting existing electricity resources" and "could raise prices for other customers and hold back emission-cutting goals."
The nuclear-tech marriage has forced many Wall Street analysts in recent months to jump on the powering up America theme. Greater load demands are projected in the coming years due to AI data centers, electrification of the economy, and reshoring efforts.
Recent estimates from North American Electric Reliability Corporation forecast that electricity growth over the next five years will increase from 2.6% to 4.7%, driven by major utilities revising up their estimates.
The chart below shows data center power consumption by providers/enterprises in gigawatts (left) and share percent (right).
Notice how AI data centers demand an incredible amount of power compared to traditional data centers.
Tech's push to acquire nuke power for AI data centers has been enough to reverse the tide of plant closures and spur the White House to begin developing a new push to revive nuclear (read: "In Historic Reversal, US To Restart A Shut Down Nuclear Power Plant For The First Time Ever").
Constellation's president and CEO, Joseph Dominguez, told WSJ that large swaths of the land from Pennsylvania to Illinois are oversupplied with power and could be future sites for AI data centers.
While it's too early to forecast just how much power AI data centers will need, one concern is that existing electricity resources are being diverted off-grid to data centers, which could drive up power prices for consumers.
To solve this, more nuclear power plants will need to be constructed, and the winning plant design will likely be advanced small modular reactors.
