Data centers can require copious amounts of power that an electric grid may not be able to provide. As such, the largest tech firms are considering the use of nuclear power. That could be a boon for uranium prices.
“Last year, both AWS Microsoft signed agreements to offtake power from nuclear power stations,” noted Data Center Dynamics. “In addition, Meta launched a request for proposals to identify potential nuclear energy developers to support 1.4GW of new nuclear generation capacity across the US.”
While demand is elevated, the necessary supply to meet said demand is another issue. Large tech firms are also starting to implement AI projects. Therefore, energy demands become even greater.
One way to shore up supply is to increase the number of uranium mining projects and associated uranium conversion facilities. But other issues arise. As Data Center Dynamics noted, lengthy lead times and high upfront costs for conversion facilities means supply could suffer in the short term.
“We just don’t have enough conversion and enrichment in the [west. That’s] why the price has had this kind of [move. And] that price will only go higher,” said Nick Lawson, investment group Ocean Wall’s CEO.
Getting government on board can also present a regulatory hurdle. But the current administration under President Trump appears to be supportive of nuclear initiatives. Inside Energy & Environment noted the “Trump Administration has positioned itself as supporting the rapid deployment of both co-location and nuclear energy.”
2 Options to Attain Uranium Exposure
There’s growth momentum behind uranium and nuclear power usage in data centers. So investors may want to consider exposure to add diversification to their current portfolios. Futures contracts in the spot price of uranium can be an option. But an easier way is via uranium miners. More specifically, via the Sprott Uranium Miners ETF (URNM ) or the Sprott Junior Uranium Miners ETF (URNJ ).
URNM provides a broad-based solution, tracking the North Shore Global Uranium Mining Index. The index is designed to measure the performance of companies involved in the uranium mining industry. This includes companies engaged in the mining, exploration, development, and production of uranium, as well as those that hold physical uranium or uranium royalties. It invests in global firms that mine, develop, and produce uranium. It also invests in firms that hold the physical metal, or that derive royalties from it. The fund is an ideal pathway for investors to get exposure to rising prices of the element. It also provides a portfolio diversification tool that allows for uranium exposure without investing in the commodity itself.
For Investors wanting greater growth potential and don’t mind the increased volatility, small-cap companies can offer amplified moves when markets trend toward the upside. Investors could create a small-cap uranium mining portfolio of individual stocks. But an easier way is via URNJ. The fund seeks to provide investment results that correspond generally to the total return performance of the Nasdaq Sprott Junior Uranium Miners Index. That index tracks mid-, small-, and micro-cap companies in the metal’s mining business.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
Disclosure Information
An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus, which contains this and other information, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing, which can also be found by clicking one of the links below.
Neither URNM nor URNJ are invested in any portion of AWS, Microsoft, or Meta.
Past performance is no guarantee of future results. One cannot invest directly in an index.
Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance.
Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc. or VettaFi.
Exchange Traded Funds (ETFs): SETM, LITP, URNM, URN, COPP, COPJ, NIKL, SGDM SGDJ
