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If you’re looking at uranium prices inching higher today and wondering where the good mood is coming from, you could be forgiven. While the NYMEX benchmark has improved overnight by some +1.2%, the benchmark is down -10% WoW.
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That’s because uranium fell off the everything-metals-rally last week when Kazakh Kazatomprom came out and said it would boost yearly uranium production by +9%. That helped to pour some cold water.
And what we’re seeing now on Tuesday Down Under, as Deep Yellow (ASX:DYL), Silex (ASX:SLX), and Boss Energy (ASX:BOE) all climb higher, isn’t a recovery of the idea that uranium will go up like gold, but instead, a secondary relationship to an equally large thematic: Artificial Intelligence.
How does that work?
Some backstory here. Notwithstanding the Kazatomprom announcement, uranium stocks took a hit last week when Wall Street floundered after a weeks-long scare in software stocks particularly helped push the S&P500 negative YTD (at the time, anyway, Wall Street’s back on the edge of record highs, once again).
Those software shocks fed back into the Mag7; ironically, it’s a fear that AI will kill demand for software stocks offering SaaS products that saw the tech thematic cannibalise itself, really, if you’ll allow me to use the term.
But now the Week 6 sell-off is over, the Dow Jones hit fresh records on the Friday U.S. session, which saw the ASX 200 jump nearly +2% (just south of) on Monday. In that gust of wind, tech stocks back up.
How does that relate to uranium?
And here’s why they’re bringing uranium stocks up with them: Because by and large, tech companies have been running hard with the notion they’ll power data centres one day with nuclear power. That’s a big ESG promise; it’s also a big promise outright. Nuclear plants take a long time to build, and despite a lot of talk about small modular reactors, they’re still fairly scarce in terms of operating assets.
But that isn’t enough to kill a good story, at least. Meta has already inked deals with players in the industry, making promises to expand three nuclear power plants – as well as reopening an abandoned reactor in Illinois, of all missions, which probably is cheaper than building a new one outright.
Before we know it, Facebook might be seen as the old imperative of an energy company. Let’s hope it doesn’t go the way of the Metaverse. Amazon and Google have also flagged investments into developing nuclear to power AI data centres, and Microsoft is intending to take over Three Mile Island.
It’s a strange world, but where Big Tech is the new Big Oil, perhaps it isn’t so surprising Big Tech now wants to become Big New Energy.
And as long as there’s cash to be made, investors are unlikely to care about how long that will really take, whether it’s really realistic, and whether those software stock operators really do have something to worry about.
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