Shares of Centrus Energy (NYSE: CCJ) are moving higher this week. The company’s stock was up 11.5% at 1:08 p.m. ET from last Friday’s close. The S&P 500 index and the Nasdaq-100 index were up 1.2% and 1.8%, respectively, at the same time.
Centrus, a provider of enriched uranium to fuel nuclear reactors, saw its stock rise after the announcement of a major deal between Meta Platforms and Constellation Energy and after receiving a buy rating from Bank of America.
AI needs a whole lot of power
Meta, the parent company of Facebook and Instagram, signed a deal earlier this week that will grant it access to all the energy output from the Clinton Clean Energy Center nuclear reactor in Illinois. The 1.1 gigawatt output is enough to power 800,000 homes.
Meta and other tech companies are finding it difficult to access enough power to meet the incredible demands of AI, especially if they are to try to meet their respective climate goals. Nuclear power offers relatively cheap, consistent, and abundant power without pumping greenhouse gases into the atmosphere.
Image source: Getty Images.
The announced deal helped shares of Centrus move higher, as it was a clear signal that the AI industry will actively pursue nuclear energy solutions.
Centrus is growing
Centus is in a strong position to capitalize on this accelerating demand for nuclear power. It is one of only two licensed producers of enriched uranium in the U.S., giving it a substantial moat. If the marketwide trend holds, and I think it will, Centrus will no doubt benefit. And while its stock is not cheap, I think its future income justifies it.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Bank of America is an advertising partner of Motley Fool Money. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, Constellation Energy, and Meta Platforms. The Motley Fool has a disclosure policy.