Artificial intelligence (AI) has significant energy demands and nuclear power is ready to oblige. Nuclear is carbon-free, dependable and inexpensive once plants come online.
Those are among the reason why AI hyperscalers, including Alphabet (GOOGL), Amazon (AMZN), Meta Platforms (META) and Microsoft (MSFT), are notching agreements to get their hands on nuclear power. That trend speaks to an investment thesis with long-term potential — one that’s the foundation of the newly minted ALPS Nautilus SMR, Nuclear & Technology ETF (SMRF).
SMRF, which came to market last month, is unique on multiple fronts. First, it’s not your typical nuclear energy ETF. It touches multiple bases within that industry, including uranium miners, generation and transmission of nuclear power, and manufacturers of small modular reactors (SMRs). Second, the new ETF features some exposure to the technology sector, enhancing its AI credibility. Finally, it features an options overlay to deliver steady income — a trait that’s very much unique among nuclear ETFs.
More Reasons to Consider SMRF
Any and all of those traits make for compelling reasons to investigate SMRF, but the SMR is one worth honing in on.
“Smaller, faster-to-build nuclear reactors reduce construction time and costs compared to traditional plants. Their modular design allows factory-built components and scalable deployments. Co-locating AI data centers directly beside these reactors would further reduce transmission costs, free up grid capacity, and ensure ultra-reliable power for AI workloads,” reported Utility Dive.
SMRs have multiple tailwinds, including time to scale, energy security, and climate friendliness. Those factors are on the minds of global governments and perhaps some hyperscalers, indicating SMR demand could be substantial for years ahead. That could be a catalyst for SMRF.
Reliability and cost efficiencies also underpin the case for the AI/nuclear union, potentially highlighting longer-ranging opportunity with SMRF.
“Customers want AI to be fast and always available. Investors want new and better data products. Innovation requires a lot of computing power. Providing what customers and investors want is an existential assignment for any corporation. In technology, the demand and the competition are hyperscale and hyperfast,” according to the International Atomic Energy Agency (IAEA). “There is only one energy source that can meet combined demands of low-carbon generation, 24/7 reliability, massive power density, grid stability, and genuine scalability: nuclear energy.”
Bottom line: The actively managed SMRF is a new ETF, but lack of age doesn’t diminish the fact that it’s addressing pertinent investing concepts and setting itself apart from entrenched incumbents in the process.
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VettaFi LLC (“VettaFi”) is the index provider for SMRF, for which it receives an index licensing fee. However, SMRF is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SMRF.
