AI takes massive amounts of energy to do even the simplest of tasks. Those billions and billions of calculations are now taking a bite out of the energy grids all around the world.
According to the International Energy Agency (IEA), data centers around the world currently account for 1.5% of the world’s total energy use. To put that into perspective, the continent of Africa uses 1%-6% of the world’s energy.
Furthermore, Wells Fargo has projected that AI power demand will increase 550% by 2026 and another 1,150% by 2030.
This is a problem, a very big problem.
Investors Looking at a Buy the Dip Opportunity in Nuclear AI
Two companies at the hearts of the Nuclear AI movement are Nano Nuclear Energy (NNE) and NuScale Power (SMR).
Both stocks have seen weakness in their price activity over the last five days as investors appear to be taking short-term profits from both stocks.
Over the last month, |Shares of NuScale are trading 70% higher while Nano Nuclear Stock has posted returns of 66% at their highs.
To say that both of these stocks need a technical break, or a “Healthy Correction” is an understatement.
Over the last two weeks, Nano Nuclear shares have dropped 25%. The retracement in prices has dropped the stock to its 20-day moving average. This short-term technical trendline has been providing some support, suggesting that investors may be ready to buy the dip in NuScale at $22.50.
NuScale Shares Also Sitting at a Buy the Dip Price
SInce the stock hit its highs of $32.25 last week, NuScale stock has dropped to critical support at the $25 level.
The drop in price has been on little to no news, suggesting that the stock has experienced a short-term correction that will reset prices for another move higher.
NuScale shares are sitting just below $25, a key psychological support price.
In addition, the stock is also trading just below its 20-day moving average. That trendline is often referred to as the “Trader’s Trendline as moves above or below the 20-day will increase short-term trader activity on a stock.
A move back above $25 after a short test of $22.50 will signal that the stock is ready to advance back to its highs as investors jump on the opportunity to buy the stock after its recent dip.
Why These Nuclear AI Stocks will Continue Higher
The market is embracing the idea of nuclear-powered AI, note that I said “the market”
We’re seeing a heavy increase in interest of reviving the nuclear energy industry, but this is a movement that will take years to just get through regulatory review and approval.
Microsoft’s announcement a few weeks ago 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.
But the market is clearly favoring the approach of companies partnering with small modular reactor developers as the real future of the industry.
The road will be longer in terms of fully developing products specifically for the AI industry and data centers, along with their approval. But the possibility opens much wider in the market after that point.
Investors that are looking at the “horizon” see SMR technology that can be dropped in data centers as needed, where needed.
What Happens from Here
Both Nano Nuclear and NuScale will see a new round of buying interest hit the shares as soon as they exhibit signs that the short-term correction has finished.
For Nano Nuclear, a move above $27.50 will signal that the stock is set for its next 20-30% rally higher.
For shares of NuScale, a move above the same price $27.50, will indicate that the stock’s next FOMO (Fear of Missing Out) rally is leaving the station. Expect to see investors start buying shares quickly as the stock heads towards its next target of $35 or $40.
— Chris Johnson
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Source: Money Morning