AI-driven power demands raise interest in nuclear energy stocks and ETFs.
AI data centers may increasingly use nuclear energy, boosting sector growth.
U.S. aims for 200 GW new nuclear capacity by 2050, influencing market trends.
Top nuclear energy ETFs
Global X Uranium ETF Sprott Uranium Miners ETF VanEck Uranium and Nuclear ETF
Should you invest?
With the market's rampant interest in artificial intelligence (AI), investors have begun to pay greater mind to nuclear energy stocks and, with them, nuclear energy exchange-traded funds (ETFs). For investors who don't closely follow the AI industry, the connection between AI and nuclear energy may seem odd. But the reason is simple. AI computing places considerable power demands on the electrical grid -- a problem that many believe can be ameliorated by a data center embrace of nuclear energy.
Experts believe that the sizable power demands that AI is causing will continue to escalate. According to consulting firm McKinsey and Company, demand for AI-ready data center capacity could rise at an average annual rate of 33 percent between 2023 and 2030."
Artificial Intelligence
Artificial intelligence is the use of machines to mimic human intelligence.
To put in perspective the growing size of data centers, consider the fact that Oracle (ORCL 1.43%) chairman and chief technology officer Larry Ellison stated on the company's first quarter 2025 conference call that it's developing an 800-megawatt (MW) data center that "will contain acres of Nvidia (NVDA -2.85%) GP clusters able to train the world's largest AI models." Three small modular nuclear reactors (SMRs) are planned to power the data center. McKinsey estimates that the average data center size is 200 MW.
Government attention to nuclear energy is another factor motivating investors to take a closer look at this niche of the energy sector. Providing support for the nuclear industry, the Biden Administration revealed a framework that attempts to have the United States deploy 200 gigawatts of net new nuclear energy capacity by 2050.
Understanding nuclear energy
While investors may recognize the strong attention that nuclear energy is receiving right now, many may still be unclear about what exactly nuclear energy entails. And since the best investors are well-informed investors, it's worth taking a quick look at how nuclear energy is used to generate electricity.
Essentially, nuclear energy results from two types of reactions: nuclear fission and nuclear fusion. These days, nuclear power plants generate electricity from nuclear fission, the process of splitting the nucleus of an atom into smaller parts, which results in the production of free neutrons and lighter nuclei, along with a large amount of energy. This process generates substantial amounts of heat, which is then used to produce steam for driving turbines connected to electricity generators.
Unlike the situation with burning fossil fuels, no carbon dioxide is produced when electricity is generated as a result of nuclear fission.
Three top nuclear energy ETFs to buy in 2024
While investing in individual nuclear energy stocks is certainly a valid approach, those interested in mitigating risk may find nuclear energy ETFs more appealing since the downturn of an individual stock that's part of a fund will have a less ruinous effect on one's portfolio than investing in a single stock.
1. Global X Uranium ETF
With 51 holdings in its portfolio and $3.6 billion in assets under management, the Global X Uranium ETF (URA -0.65%) provides investors with ample exposure to the nuclear energy industry. Besides companies that produce uranium, the ETF includes businesses that make nuclear components and provide services for nuclear power plants.
Cameco (CCJ -1.08%), a leading producer of uranium, represents the largest position in the Global X Uranium ETF with a 24.4% weighting. Small modular reactor stocks NuScale Power (SMR -2.37%) and Oklo (OKLO -0.08%) also find themselves among the top 10 largest positions with weightings of 3.6% and 3.1%, respectively.
Due to the large position that Cameo occupies as well as the high weightings of other uranium producers like Uranium Energy (UEC -1.17%) and Denison Mines (DNN -1.56%), energy stocks represent the largest sector in the portfolio at 65%, while industrials and materials are the next two largest sectors represented.
The Global X Uranium ETF has a 0.69% total expense ratio.
2. Sprott Uranium Miners ETF
Characterizing itself as "the only ETF to provide pure-play exposure to uranium miners and physical uranium essential to nuclear power," the Sprott Uranium Miners ETF (URNM -0.32%) attempts to invest at least 80% of its total assets in securities found in the North Shore Global Uranium Mining Index -- an index which strives to track the performance of companies dedicating at least 50% of their assets to the uranium mining industry.
Cameco again stands as the largest position with a 16.8% weighting in the ETF, which has 38 holdings overall and net assets of $1.7 billion. Besides established uranium producers like Cameco and Denison Mines, the Sprott Uranium Miners ETF includes exploration stage companies such as Ur-Energy (URG -2.92%).
The Sprott Uranium Miners ETF has a 0.75% total expense ratio.
3. VanEck Uranium and Nuclear ETF
Unlike the previously mentioned nuclear energy ETFs, the VanEck Uranium and Nuclear ETF (NLR 0.08%) will appeal to investors who are also looking to generate some passive income since it has a 12-month yield of 3.7% and makes annual distributions.
The ETF, which has 27 holdings, has the usual suspects of nuclear energy stocks like Cameco and Denison Mines, but it also gives strong weighting to utility stocks that operate nuclear power assets among its holdings. Energy sector stocks and utilities stocks represent 44.6% and 41.5% of the portfolio, respectively.
Constellation Energy (CEG 1.01%), for example, is the largest position in the fund with a 7.9% weighting, and Public Service Enterprise Group (PEG 1.8%) is the third-largest position with a 7% weighting.
The VanEck Uranium and Nuclear ETF has a 0.61% net expense ratio.
Market Data 
Markets 
AI
