Big Tech Is Funding an Atomic Renaissance By Sean Michael Cummings, analyst, True Wealth
Bees couldn't stop Mark Zuckerberg's nuclear ambitions... The Meta Platforms (META) founder planned to team up with a power plant to fuel a new artificial intelligence ("AI") data center earlier this year. But it was called off after an endangered species of bee was found living on-site. The rare bees are protected by regulations. So Zuckerberg came up with something else... Last Tuesday, Meta said it plans to develop reactor technology in-house. And it has already asked for proposals from nuclear developers. It might sound strange that a social media company is getting into atomic energy... But like most tech giants today, Meta wants to ride the boom in AI. And the energy demands of AI are staggering. According to the Financial Times, one AI query uses roughly 10 times more energy than a typical Google search. And Goldman Sachs expects power demand from data centers to grow 160% this decade.
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That means Zuckerberg has little choice. And that's great news for nuclear energy bulls... Meta has already lost one technological arms race – and it doesn't want to make the same mistake twice. You see, Meta's rival Apple made it to the top long ago... in mobile hardware. If you do business online these days, you have to deal with Apple's smartphones and iOS operating system. Today, Apple charges companies 30 cents on the dollar to advertise on Instagram, Facebook, and WhatsApp for iOS... all platforms that belong to Meta. We can break out the numbers. In its third quarter, Meta reported ad revenue of $39.9 billion. And according to web-traffic analysis company StatCounter, iOS has a roughly 28% share of the world's mobile operating system market. That suggests Meta's fees to Apple were around $3.3 billion last quarter. Now, Meta doesn't pay those fees. It pushes the cost onto customers. But it still isn't happy. Meta issued this statement about Apple's fees in 2022... Apple continues to evolve its policies to grow their own business while undercutting others in the digital economy. Apple previously said it didn't take a share of developer advertising revenue, and now apparently changed its mind. Meta might not have to pay Apple fees directly... But Apple still earned $3.3 billion on Zuckerberg's products last quarter. That's the value of winning a technological arms race. Apple burned a lot of cash to get there... but it made iOS a fixture in the smartphone ecosystem. Now, AI is poised to be the next sea change. Meta knows it can't lose this capital-expenditure race. So it's willing to spend big to stay competitive. And of course, the same is true for other mega-cap tech companies right now... Amazon acquired a nuclear power plant for $650 million this March. Then, in September, Microsoft revealed plans to recommission the Three Mile Island energy plant to power its data centers. And Google signed a deal in October to start using small nuclear reactors. It seems like everyone is jumping into the race for nuclear energy... These tech companies can't afford to fall behind. So they have to chase each other down every costly rabbit hole. At first, it was operating systems... Then, it was graphics processing units... Then, it was server space... And now, it's clean, efficient energy. It's the only way to meet the demands of AI. This will force Big Tech to sink cash into the nuclear sector... The trend should boost nuclear companies like NuScale Power (SMR) and Cameco (CCJ). And broad-based nuclear funds like the VanEck Uranium and Nuclear Fund (NLR) should benefit, too. In short, tech giants have no choice but to spend on nuclear energy today. This backdrop could send nuclear stocks soaring. Make sure you're positioned to benefit. Good investing, Sean Michael Cummings Further Reading "The U.S. energy grid is in serious need of innovation," Sean writes. But this innovation won't come from wind and solar energy. Instead, our energy needs depend on nuclear energy. And the trend is already starting... Read more here. Despite the push for cleaner energy, global demand for oil remains strong as the population grows. And with recent shifts in the oil and gas industry, investors are in a win-win position... Learn more here. |
Market Notes HIGHS AND LOWS NEW HIGHS OF NOTE LAST WEEK Morningstar (MORN)... financial services
Robinhood Markets (HOOD)... stock-trading app
Block (SQ)... cashless payments
PayPal (PYPL)... cashless payments
Amazon (AMZN)... Big Tech
Apple (AAPL)... Big Tech
Meta Platforms (META)... Big Tech
Netflix (NFLX)... streaming giant
Twilio (TWLO)... cloud services
Garmin (GRMN)... GPS technology
Booking (BKNG)... online travel services
Carnival (CCL)... cruises
Royal Caribbean Cruises (RCL)... cruises
Hilton Worldwide (HLT)... hotels
Hyatt Hotels (H)... hotels
Shake Shack (SHAK)... fast food
Williams-Sonoma (WSM)... cookware and decor
U.S. Foods (USFD)... packaged foods
Walmart (WMT)... discount-retail giant
Costco Wholesale (COST)... membership-only stores
Cummins (CMI)... diesel engines
Wabtec (WAB)... rail technology
NEW LOWS OF NOTE LAST WEEK
Rogers Communications (RCI)... Canadian telecom
Mondelez International (MDLZ)... candy and snacks
LyondellBasell Industries (LYB)... chemicals
Frontline (FRO)... oil tankers
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