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It feels like death by a thousand cuts for uranium investors. Every couple of months, a new bearish narrative takes hold of the sector. With utilities still on the sidelines, and the spot market continuing to grind lower, investors have been capitulating in waves, leading to precipitous declines in the stocks. Many of the equities are in process of retesting or breaking their lows from last summer, during the Yen carry trade unwind.
On Monday, January 8th, the sector was gripped by fears that new, more efficient AI models from Chinese company DeepSeek would invalidate the thesis for nuclear power. More recently, news that Microsoft (MSFT) is canceling numerous datacenter leases has further soured sentiment with respect to AI-related capex, with some fearing a potential cancelation of the Three Mile Island (TMI) restart.
Of course, in a sector known for knee-jerk reactions, investors haven’t paused to think about how much AI demand is currently penciled into uranium demand models (the answer is almost none).Those who have done their homework however, know that the uranium thesis doesn’t need AI. It’s AI that potentially needs nuclear power / uranium to be viable.
Long before the AI hype took off, datacenter electricity consumption in the US was expected to more than double by 2030 (see slide from BCG below), driven by cloud connectivity, telco advancements (5G) and increased computing needs. Outside of the US, electricity demand is booming due to urbanization (especially the increased usage of air conditioning), manufacturing and EVs (e.g. China).AI or no AI, demand for electricity is going up worldwide, and more nuclear power will be required to meet these needs.
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From
The Pale Blue DotUranium Update - by Saad Khan - The Pale Blue Dot
(20min delay)