Wells Fargo Investment Institute is betting on the “nuclear option” to help power the U.S. economy, a stance that echoes recent bullishness from Cathie Wood‘s Ark Invest.
US Power Demand Could Rise 25% Over 10 Years
In new market commentary, the firm highlights an anticipated surge in electricity demand, primarily driven by artificial intelligence (AI), and identifies the Industrials and Utilities sectors as key beneficiaries.
The analysis, authored by Senior Global Market Strategist Scott Wren, projects that U.S. power demand could rise by a staggering 25% over the next decade-plus. In the near term, Wells Fargo estimates a 2% to 2.5% annual increase over the next five years.
While AI is the main new driver, the report notes that states like Texas and California were already struggling to meet peak-usage demand even before the advent of power-hungry data centers.
‘Nuclear Option’ Is The Best Bet
To meet this demand, Wells Fargo argues that “the nuclear option appears to be back on the table” alongside other sources like coal, natural gas, and renewables.
The firm points to the development of advanced nuclear technologies, particularly small modular reactors (SMRs), which are intended to be safer, cheaper, and quicker to construct than older facilities.
While the full deployment of SMRs is likely “five years away, or more,” the companies developing and building this technology are largely in the Industrials sector, on which the firm holds a favorable rating.
Cathie Wood Believes Nuclear Could Become The Cheapest Power Source
This view aligns with analysis from Wood’s Ark Invest, which recently argued that nuclear energy could potentially emerge as the lowest-cost source of electricity, outcompeting solar when utilization rates are factored in.
Investor enthusiasm for this theme is already evident in significant market gains. Several nuclear-linked stocks have seen explosive year-to-date performance, including Oklo Inc. with a rise of over 454%, Lightbridge Corp. up over 354%, and Nuscale Power Corp. jumping 114%.
| Nuclear Energy Linked Stocks | YTD Performance | One Year Performance |
| Oklo Inc. (NYSE:OKLO) | 454.83% | 458.15% |
| Nuscale Power Corp.(NYSE:SMR) | 114.06% | 77.07% |
| Lightbridge Corp. (NASDAQ:LTBR) | 354.71% | 179.40% |
| Centrus Energy Corp. (NYSE:LEU) | 339.88% | 274.02% |
| BWX Technologies Inc. (NYSE:BWXT) | 77.72% | 67.43% |
| Constellation Energy Corp. (NASDAQ:CEG) | 49.73% | 54.58% |
| Talen Energy Corp. (NASDAQ:TLN) | 90.12% | 90.12% |
| Entergy Corp. (NYSE:ETR) | 27.69% | 31.84% |
Nuclear-focused ETFs have also benefited, with the VanEck Uranium and Nuclear ETF and the Range Nuclear Renaissance Index ETF both up over 68% year-to-date.
Wells Fargo Also Favors Utilities
Wells Fargo also favors the Utilities sector, anticipating it will benefit “should power demand, and pricing, increase as we expect”.
In the interim, the firm notes that natural-gas turbines, produced by Industrials companies, are helping to bridge the immediate power gap for data centers.
Meanwhile, experts like Chamath Palihapitiya and Jeff Bezos have touted data centers in space to better harness solar energy. Elon Musk has also recently joined the chorus. Meanwhile, OpenAI and Samsung are exploring floating data centers to use seawater for cooling.
While the S&P 500, Dow Jones, and Nasdaq 100 closed higher on Wednesday, the futures were lower on Thursday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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