AI’s Power Needs Go Nuclear, But There Is a Better Answer – And Opportunity

Strong demand may give this power source the long-term boost investors have waited for. [TradeSmith Power Trends logo] [TradeSmith Power Trends logo] October 10, 2024 AI’s Power Needs Go Nuclear, But There Is a Better Answer – And Opportunity The partial nuclear meltdown in 1979 at Three Mile Island was a defining moment. I was too young to understand, but I have no doubt many of you remember it well. And now, the site of the worst commercial nuclear power plant accident in U.S. history is going to start operating again for reasons nobody would have dreamed about 45 years ago. That accident brought to a screeching halt the idea that nuclear power was the way of the future. The realization that plants could malfunction and spew radioactive gases into the air scared the heck out of a lot of people. In fact, no new nuclear power plants have been built since then. Some were completed after 1979, but no new ones have been started. But the fact that two companies are joining forces to reopen part of Three Mile Island speaks to the burgeoning demand for power in our technology-driven world. There are actually two nuclear reactors at Three Mile Island. The damaged one – TMI-2 – shut down automatically during the incident and hasn’t operated since. In fact, fuel is still being removed 45 years later in a slow and dangerous process. The undamaged reactor, TMI-1, restarted six years after the accident before shutting down again in 2019 because it was losing money. But money troubles don’t appear to be a concern this time around. TMI-1 is going to fire up again because of artificial intelligence. Companies everywhere are rushing to incorporate this admittedly amazing technology, and some stocks have soared on the news. Nvidia (NVDA) seems to get the most attention, and it has nearly tripled in the past 12 months. In my [Quantum Edge Pro]( service , we’ve already locked in a double in Super Micro Computer (SMCI), even as we still hold one-third of our original position. But the “dark side” of AI – and I mean that quite literally, should the power go out – is the incredible amount of electricity it needs to operate. Both AI and cloud computing require massive amounts of energy. Not only to power the servers stacked in data centers around the world, but also to cool the equipment that generates and stores data, and for basically all aspects of generating AI programs and algorithms. The International Energy Agency estimates that electricity use at data centers will double in just the four years from 2022 to 2026. One generative AI query – like you would do on ChatGPT – requires 10 times more electricity than a Google search, according to one estimate and saw. And that doesn’t include the “training” of new AI models, which requires more juice with every iteration. So you can see why Microsoft (MSFT) agreed to buy energy produced at Three Mile Island for the next two decades. And you can see why Constellation Energy (CEG), which owns the plant, agreed to restart TMI-1 in its largest power purchase agreement ever. The agreement calls for Three Mile Island to provide 835 megawatts of electricity, which equates to powering about 700,000 homes. That certainly helps things given the massive demand, and researchers are trying to develop “microreactors” – portable nuclear reactors – that are transportable and could generate localized power. That would help, too. But the biggest and best solution might already be available, and the opportunity for investors might finally arrive. SPONSORED AD [TONIGHT: Could Elon Musk’s Robotaxi Help You 20X Your Money?]( [image]( TONIGHT Elon Musk is set to reveal his new AI product he calls “Robotaxi…” And tech legend Luke Lango believes it could help send shares of [this little-known supplier skyrocketing by as much as 20X.]( The time to buy this sub-$3 stock is now. If you wait until after Elon’s Robotaxi event, it could be too late. [Click here.]( CEG Pops, But Watch Those Red Flags Investors clearly liked the nuclear move. Constellation Energy is already a monster growth company that produces nuclear, hydro, wind, and solar energy. Still, the Microsoft deal was huge, and CEG shot up 22.3% in one day on the news. [chart]( Shares have soared 135% in the last 12 months, more than 4X the S&P 500. And technically, it rates a buy in my system with a Quantum Score of 72.4, which is in the optimum buy zone between 70 and 85. [chart]( Source: TradeSmith Finance Sounds like a good investment, right? Well, not so fast. This is where we need to think things through. The overall Quantum Score vaulted higher because shares surged on the Microsoft news. You can see that powerful Technical Score of 85.3. But look at the Fundamental Score of just 54.2. That means mediocre fundamentals, which are my main concern. Here are just some of the particulars: - Negative 1-year sales growth of -13.5% - Negative 3-year earnings -56.3% - Negative cash flow minus expenditures of -$7.723 billion Microsoft may well help turn this company into a fundamental powerhouse… but then again, maybe not. I want as much certainty as I can get when investing. So perhaps there is a better play on the AI energy boom… Follow the Sun AI-related data center power needs will only continue to grow, and meeting those needs with nuclear power is not practical. First of all, nuclear can’t keep pace with the explosive growth predicted for data centers. From breaking ground to operation takes anywhere from six to 12 years. That won’t cut it. By the time a new plant comes online, demand will already be many times greater than the power it supplies. And then there’s cost. A large 1-gigawatt reactor costs around $5.4 billion to build. Compare that to our old friend solar energy, which is significantly cheaper. A 1-giawatt equivalent of solar costs just $750 to $800 million to install. And large commercial solar projects can be up and running in just 12 to 18 months. That means solar is 85% cheaper than nuclear and can take one-tenth the time to roll out. I know solar has taken investors on wild rides through the years. I myself have made and lost money on it. The ESG initiative helped propel and sink stocks in recent years. But with the explosive demand for energy to power the AI revolution, the world needs a quick, cheap, and scalable solution. And when there is real industrial demand behind a movement such as solar, it may finally gain the long-term traction it seeks. AI is not only in the here and now, it is assured to be a major driver of our technology and society in the years to come. Thats why nothing else lines up quite like solar at the moment. Find Those Top-Tier Investments So how do we find the best solar stocks to invest in? A quick screen revealed 48 solar stocks that I then ran through [my Quantum Edge system]( to rate them on fundamentals, technicals, and Big Money inflows. The starting point is the overall Quantum Score, which tells us most of what we need to know about whether a stock is a great investment or one to pass over. Two of those 48 stocks rose to the top with outstanding Quantum Scores. One scored 72.4, and the leader checked in at 79.3. I can’t reveal the research here, but I can show what the scores looked like… [chart]( Source: TradeSmith Finance If you want broad-based exposure to solar energy, you could consider investing in an exchange-traded fund like Invesco Solar ETF (TAN). The problem is that you get the laggards as well as the leaders. My system also rates ETFS, and TAN’s Quantum Score right now is just 31.3. That’s well outside of the buy range and not surprising, as TAN’s chart looks terrible. AI and data are our present and future, and we need to meet the massive power demand. Fossil fuels and nuclear are showing their imitations in terms of cost, rollout, and scalability, but the sun as an energy source looks brighter and brighter. The best part? It’s estimated to have another 5 to 8 billion years before it fizzles. Power generation is just one of many offshoot AI trends set to produce big profits in the years to come. These two stocks above are definitely on my radar, and I know more will appear in the future. Solar stocks should be on your radar, too. Just stay focused on the fundamentals, technicals, and Big Money inflows – all of which is summed up in the Quantum Score. That’s how my [Quantum Edge system]( has beaten the S&P 500 7-to-1 since 1990, according to TradeSmith’s back testing, and how I count on a 70% win rate. If you do that, your financial future should be so bright, you gotta wear shades! Talk soon, [Jason Bodner signature] [Jason Bodner signature] Jason Bodner Editor, Jason Bodner’s Power Trends P.S. You can receive access to the valuable Quantum Score on roughly 6,000 stocks as a member of [Quantum Edge Pro](. This is the very same data I look at, and it also includes the Fundamental Score, Technical Score, and whether the stock is in the buy zone. You can score your current stocks or any stock you’re interested in simply by typing in the symbol. Of course, members also receive my handpicked recommendations based on the Quantum Score and other data that I can’t make public. [Simply click here to learn more if you’re interested in trying it today](. © 2024 TradeSmith, LLC. All Rights Reserved. P.O. 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