Hedge funds are increasingly investing in nuclear-power producers, anticipating a surge in electricity demand from the artificial-intelligence (AI) sector. A recent analysis of 697 funds with over $3 trillion in assets under management reveals this trend.
In the third quarter, money managers continued to add nuclear-sector stocks to their portfolios, even as they reduced positions in other power producers and infrastructure companies. This strategic move is reflects the recognition of nuclear energy’s growing role in supporting the energy-intensive AI infrastructure.
Tech industry leaders like Meta Platforms and Alphabet have previously suggested that new nuclear facilities could help meet this increasing demand. As a result, Texas power producer Vistra Corp., which operates 6.4 gigawatts of nuclear-energy generation capacity in the U.S., has joined Goldman Sachs’s Hedge Fund VIP list of popular long equity positions.
Similarly, Talen Energy Corp., another Texas-based independent power producer, entered the VIP list in the third quarter. Talen owns and operates the 2.7 GW Susquehanna Steam Electric Station in Pennsylvania. In March, Amazon Web Services struck a $650 million agreement with Talen to acquire a data center powered by Talen’s Pennsylvania nuclear facility. This partnership underscores the growing symbiosis between tech innovation and clean energy solutions.
While hedge funds maintained their exposure to AI-related themes, they reduced investments in the semiconductor industry for the first time since Q2 2022. The “Magnificent Seven” megacap tech stocks continue to drive significant returns, contributing to U.S. equity long/short funds generating impressive gains of 14% in 2024 so far.
The surge in hedge fund interest in nuclear power stems from multiple factors: anticipated electricity demand growth, particularly from AI; nuclear energy’s role in clean energy transition; attractive market opportunities in the uranium sector; technological advancements in reactor designs; government and industry support; and nuclear power’s potential to ensure long-term energy security. These factors collectively position nuclear energy as a promising investment in the evolving energy landscape.