Things have been relatively quiet in the nuclear industry for the last few weeks, but that’s about to change.
Last May, I put you on the trail of companies like Nano Nuclear (NNE), Rolls Royce (RYCEY) and NuScale Energy (SMR) as the growing need for energy was becoming clearer. Also included in the mix are Constellation Energy (CEG), Oklo Inc. (OKLO) and the VanEck Vectors Uranium and Nuclear Energy ETF.
We’ll get to those in just a minute. First, let’s answer the question, “Why AI Nuclear Stocks?”
Here’s why…
In the first half of 2024, construction on 78 data centers was started. That’s a record.
Some of the new data center projects are very large, like the QTS New Albany 1 and 2 in Ohio, which is considered the biggest single data center project ever recorded.
The surge in data center construction is mainly attributed to the increasing demand for cloud computing and AI services, which require record-setting data processing power.
Let’s repeat that last line… “which require record-setting data processing power.”
You get the idea?
These record have created an opportunity, and it hasn’t fully passed. As a matter of fact, the opportunity is still in its early phases according to an age-old example of how markets work.
An Investment History Lesson that Never Ages
Let’s go back to the 17th century to review one of the most basic tenets of investing.
In the 17th century, Holland witnessed one of the most infamous economic bubbles in history, known as “Tulip Mania.” This phenomenon saw ordinary tulip bulbs, particularly those with rare color patterns caused by a virus, achieve astronomical prices.
The roots of this bubble can be traced back to a growing obsession among the Dutch merchant class who used these tulips as symbols of status and wealth. The rarity of these bulbs and the ease with which they were traded created a perfect storm, driving prices to the point where some bulbs were worth more than houses.
The pattern by which this phenomenon grew has been a roadmap to the trend that new investments and innovations follow for decades.
The roaring twenties, Japan’s Real Estate Bubble (1986), The .COM Bubble (2000) and The US Housing Bubble (2008). All followed the same pattern forged by Tulip Mania.
A simple comparison of the chart above to the chart of the Nasdaq Composite below (encompassing the .COM Bubble) serves as a great example of this historic pattern in stocks.
Why Does the Pattern Repeat Itself Through Time?
It comes down to one thing that the markets can’t change, investor psychology.
As investors, we’re hard wired to respond to certain trigger emotions, namely two, greed and fear.
Those two primal instincts drive almost everything for humans, including their investing patterns. This is why Warren Buffett follows the rule of buying when there’s fear in the streets and selling when everyone is greedy.
Knowing the difference, and where you are in the scope of the bigger picture is the key to long-term trading success.
The Four Phases of an “Investment Mania”
Stealth Phase:
This initial phase is characterized by savvy investors identifying and investing in a promising asset before the broader market recognizes its potential. These early investments are often based on solid fundamentals or technological advancements. Prices remain relatively stable during this period, as the asset flies under the radar of mainstream investors.
Awareness Phase:
This phase marks the initial recognition of the investment’s potential. Media attention and investor interest begin to grow, driven by technological advancements and promising early returns. Prices start to rise as more investors flock to the opportunity.
Mania Phase:
During this phase, euphoria and speculation dominate. Prices skyrocket as irrational exuberance takes hold. The fear of missing out prompts even skeptical investors to buy in. Valuations reach unsustainable levels far detached from the underlying asset’s true worth.
Blow-off Phase:
Reality sets in as prices peak and then sharply decline. Early long-term investors start taking profits, leading to a sell-off. This triggers a panic among investors, resulting in a rapid drop in prices. The market eventually stabilizes at a lower level, closer to its intrinsic value.
Where are the AI Nuclear Stocks Right Now?
Fast forward to today, and we see a similar pattern emerging with nuclear stocks. As the world grapples with the urgent need for clean energy solutions, nuclear power is gaining attention as a potent alternative to fossil fuels.
This puts the Ai Nuclear stocks firmly in the “Awareness Phase”.
Over the last six months, media coverage of the nuclear companies has increased. Stories of early profits are widespread, and there is a general sense of optimism that the technology will revolutionize its field.
This is where nuclear stocks are currently situated.
Investors are increasingly aware of the role nuclear energy can play in addressing climate change, leading to a surge in stock prices as more investors want in on what could be the next big thing.
What Comes Next…
Following the Tulip Mania cycle… after the initial awareness, comes the “mania phase,” where speculation drives prices beyond sustainable levels. This is where prices of AI Nuclear stocks will hit their real bullish stride.
Volatility like investors have seen in this group of stocks will begin to smooth into a stronger trend higher as institutions and large pools of retail investors increase the daily trading volume.
Options investors will also get more involved with the small group of companies, helping to smooth the daily volatility trends.
Again, investors should review the .COM Bubble charts for a forecast of the trends that are likely to be seen in the AI Nuclear Stocks.
Here’s the Key
In 1634, the Tulip Mania cycle ran for two years before tulip prices hit their peak.
The .COM Bubble took roughly three years to run its course from the Stealth Phase to the top of the Mania Phase.
The U.S. Housing Market Bubble… about three years from 2005 to its top in 2008.
You get the idea. Once in place, the “Mania” trend takes about three years to run its course to a peak.
Intuitive investors will start to ask, “why isn’t this cycle evolving to move faster?” What took three years in 1634 should take less time in 2025 just because the speed of the markets is much faster now, right?
Wrong!
Remember what we’re dealing with here, investor psychology. That doesn’t change over time, which is why the same timeline that was played out 390 years ago is still followed today. This means that we still have two years before the bull market run in AI Nuclear stocks nears its peak.
How to Invest in the AI Nuclear Trend
The VanEck Uranium and Nuclear ETF (NLR)
Let’s take it from the simplest form, an exchange Traded Fund.
ETFs offer diversified exposure across various assets in an industry like Nuclear Power. That diversification smooths some of the volatility that individual companies in the industry may experience.
Low cost, tax efficiency, real-time trading, and flexibility make them ideal for both new and experienced investors.
The VanEck Uranium and Nuclear ETF (NLR) mimics the performance of companies engaged in uranium mining or projects expected to substantially impact their revenue or assets, as well as those involved in nuclear facility construction, maintenance, nuclear power production, and supplying equipment or services to the nuclear industry.
The exchange traded fund is already trading 18% higher year-to-date (2025) with one-year returns of 28%.
Shares of the VanEck Uranium and Nuclear ETF shifted into a new long-term bull market trend in 2023 after a long-term consolidation in the nuclear industry. Renewed interest in nuclear energy as an alternative to traditional power generation.
Today, the ETF is preparing to break out of a four-month trading range as some of the larger names in nuclear energy and uranium mining are catching up to the smaller speculative stocks in the group.
Constellation Energy (CEG)
One of the larger operators in the industry is Constellation Energy (CEG).
Microsoft’s announcement in October to partner with Constellation Energy (CEG) resulted in a 30% rally over the following two weeks. That plan includes restarting one of the facilities at the storied Three Mile Island site.
Stoking the rally have been comments from the new President’s administration that it would be looking into options to help restart or finish existing nuclear plant projects in the name of time and budget.
Shares of Constellation Energy are more than 200% higher for the last year. Those returns are bolstered by the 40% rally that started after the company’s agreement with Microsoft was made public in September.
The stock is trading well above its 50-day moving average which is in a strong bullish trend. That trend is strengthened by the stock’s strong 200-day moving average.
Shares just registered an overbought reading from their relative strength index, indicating that a short-term correction should be expected.
Any correction is likely to be short-term in nature as investors are sitting on the sidelines waiting to buy Constellation energy stock at a discount from its current price.
At its current price and technical situation, Constellation Energy appears to be ready to provide a “Buy the Dip” opportunity at $325 and $300 for patient investors.
Nano Nuclear (NNE)
More speculative investors may consider a newer name in the industry.
On Thursday, President Trump mentioned developing energy sources that could be constructed adjacent to new data center construction. This would prevent large data centers from drawing from the public energy grid.
This is the type of product that Nano Nuclear and NuScale Energy are in the process of developing.
Nano Nuclear shares started trading in May 2024. The company is in the developmental stages, so investors should consider this a speculative option among the AI Nuclear stocks.
Nano Nuclear specializes in advanced small modular reactor (SMR) nuclear technology.
The company is pioneering the development of advanced nuclear microreactors with their standout products, ZEUS and ODIN, both tailored for providing clean, efficient, and on-demand energy solutions.
Nano Nuclear’s compact reactors are designed to transform energy access across diverse sectors, particularly beneficial in remote and isolated environments.
The ZEUS model, a solid core battery reactor, is engineered for robustness and safety, offering a reliable energy supply without the complex infrastructure traditional nuclear power demands.
This makes it an ideal choice for small-scale industrial applications or emergency energy backup.
The ODIN reactor features a low-pressure coolant system, enhancing safety and efficiency.
It’s particularly suited for smaller communities or temporary installations needing a steady power supply.
Both models embody Nano Nuclear’s commitment to innovating energy solutions that are not only sustainable but also adaptable to varied energy needs.
Here’s Where Nano Nuclear Shares Are Heading
Shares of Nano Nuclear have returned more than 1,000% since their trading debut in May 2024.
Of the three options, Nano Nuclear is the least recognized by investors and therefore the most likely to benefit as the AI Nuclear trade advances from the “Awareness” to “Mania” phase.
Shares are trading with higher volatility, which should be expected. That volatility pays investors with higher gains over the long run.
Like Constellation Energy, Nano Nuclear’s short-term price chart suggests that the stock is likely to see another “healthy correction” over the short-term.
Shares are currently trading at new all-time highs near $45. The stock has seen a massive 80% jump over the last week as President Trump’s administration has lent positive comments to the industry.
Investors should watch out for this overbought stock to put in a short-term pullback to the $40. At that price, investors will start buying the dip on this newly discovered stock.
Shares of Nano Nuclear are in as aggressive long-term bull market trend with a possible price target of $100.
— Chris Johnson
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Source: Money Morning