What caused the increased interest in uranium-focused companies last week?Written By Hans LeeWhat’s happened?Last week, President Trump signed four new executive orders, aimed at rapidly expanding America’s nuclear energy capabilities. The long-term ambition? To quadruple the country’s nuclear capacity by 2050.According to Flash Update research notes from both Citi Research and Canaccord Genuity[1], achieving that goal would require the US’ amount of annual uranium demand to double from current levels[2]. The four executive orders are aimed at kick-starting the following initiatives:
The executive orders follow the passing of Trump’s so-called “Big Beautiful Bill”, which eliminates tax credits for most clean energy projects. Nuclear, however, is the exception, with companies in the sector still eligible for production tax credits on projects that start construction by 2031. Not just a pipe dream anymoreWhat sets these new orders apart is that they go beyond lofty long-term goals – they include concrete near-term actions. Citi’s Flash Update research note says these will range from upgrades to the existing nuclear fleet and major reforms to fast-track government approvals to plans for 10 new reactors to break ground by 2030[8].From a political point of view, China and India have long planned a significant build out of their nuclear power fleet. With the US taking concrete steps to join them, the structurally constrained market for uranium is set to get tighter. From an investment point of view, the prospect of further construction of nuclear power stations in the US has helped to boost uranium stocks and related ETFs. It’s been a volatile time to be a uranium investorCalling uranium a volatile investment might be an understatement.As demand for AI – and the energy-hungry data centres that power it – surged, so too did initial expectations for the uranium needed to fuel it. That optimism pushed uranium demand forecasts, and the share prices of uranium-focused companies, higher. But when DeepSeek’s AI model emerged earlier this year, reportedly using far less electricity, those expectations were quickly revised. Uranium mining stocks, which had been seen as key to powering the AI boom, came under pressure. Some of this pressure can be seen in the chart below. Locally, Boss Energy (ASX: BOE), Paladin Energy (ASX: PDN), and Deep Yellow (ASX: DYL) have ranked among the most heavily shorted stocks on the ASX for most of the last 18 months (to 3 June 2025)[9]. Stock prices of global companies in the uranium industry (27 May 2020 – 28 May 2025)Source: Indxx, as at 27 May 2025. Graph shows performance of the Indxx North Shore Uranium Mining Index, which Betashares Global Uranium ETF (ASX: URNM) seeks to track. Does not take into account ETF fees and costs. You cannot invest directly in an index. Past performance is not indicative of future performance of any index or ETF. Nonetheless, a significant build out of nuclear power stations in emerging market countries like China and India, as well as structurally constrained supply, may still provide a long-term tailwind for the uranium sector. President Trump’s rollback of green energy subsidies associated with the Inflation Reduction Act, and the pivot to nuclear, has jolted the uranium market back into gear. The announcements also created a scramble of short sellers trying to unwind their positions in these uranium miners – which has helped cause the renewed interest in uranium equities and uranium-related ETFs. Nuclear is no longer a nice-to-haveThe demand surge is primarily driven by data centres that require massive energy to power the AI boom, and nuclear energy is an attractive option for big tech firms given its reliability and near-zero carbon footprint.But long before AI was part of our daily lexicon, the demand-supply imbalance for uranium was already clear. According to the International Atomic Energy Agency (IAEA), uranium production volumes have been significantly below world uranium requirements for some time. In fact, in 2022, OECD member countries only produced around 30% of the uranium they required. And, as of 2023, only one country (Canada) produced enough uranium to meet its nuclear generating capacity[10]. OECD and World Uranium Production vs RequirementsSource: Nuclear Energy Agency and International Atomic Energy Agency, as published on 23 April 2025. Further, in the executive order entitled Deploying advanced nuclear reactor technologies for national security, Trump explicitly characterised AI data centres as “critical defence facilities” four times in the press release. In other words, nuclear may no longer be a ‘nice to have’. It could now be a necessity for the world and a national security priority for the US. |
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