If there was any worry that spending on artificial intelligence (AI) was finally set to slow down, it’s just been wiped away. Not only are big tech companies not dialing back their aggressive investments in AI infrastructure, but they’re ramping them up.
Google parent Alphabet (GOOG -0.12%) (GOOGL -0.13%) recently raised its 2026 capital expenditure (capex) forecast from a range of $180 billion to $190 billion to a range of between $195 billion and $205 billion. Amazon (AMZN -0.94%) upped its capex outlook for this year from a previous estimate of $200 billion to a new estimate of $220 billion. Facebook parent Meta (META -0.86%) is putting more money into AI as well, raising this money by issuing new debt.
These expanded spending plans obviously bode well for a company like Nvidia (NVDA -0.06%), which still makes the majority of the processors at work within AI data centers. It’s also a boon for less obvious, indirect beneficiaries such as Vertiv (VRT +2.36%) or GE Vernova (GEV +1.32%). The former offers power-distribution and chip-cooling solutions, while the latter makes electricity-generating natural gas turbines that can power an entire AI data center.
Image source: Getty Images.
Perhaps the most underappreciated and undervalued company that wins from these growing capital expenditure budgets, however, is Cameco (CCJ -0.01%). It provides much of the uranium needed by nuclear power plants, which are increasingly important sources of the electricity that AI data centers desperately need.
Cameco is in the right place at the right time
It’s not the only name in the uranium business. It’s technically not even the biggest name in the business. That title belongs to Kazakhstan’s Kazatomprom, which serves many of its geographic neighbors to account for about a fifth of the industry’s total global supply.
Saskatchewan, Canada-based Cameco is a major player, though, and certainly critical to North America’s nuclear power industry. It sold 33 million pounds of triuranium octoxide last year, which you may know better as the yellowcake uranium fuel required by most nuclear reactors.
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It’s not just a miner or refiner, though. The company also owns a 49% stake in Westinghouse Electric, which makes and services nuclear power reactors all over the world. Its tech is the heart of more than 90 facilities in 21 countries, in fact, providing Cameco with another (albeit indirect) foothold in the business. Last year, the company turned revenue of $3.5 billion into adjusted net earnings of $627 million, well up from 2024’s figures.
And business is about to be even better.
With the planet struggling to keep up with ever-growing demand for electricity while also working to dial back its dependence on polluting fossil fuels, well-proven nuclear power is back in vogue. The World Nuclear Association believes worldwide nuclear power capacity could easily double between now and 2050, with some projections suggesting it could triple during this time. In this vein, Goldman Sachs predicts the current global count of about 440 reactors could reach 500 as soon as 2030, although another 400-plus are either already proposed or planned, according to the World Nuclear Association.
Their one common thread? Almost all of them will be powered by uranium-235, a great deal of which starts its journey at one of Cameco’s mines.
Think bigger picture and longer term
But is the company actually going to benefit from the artificial intelligence spending frenzy that’s underway right now?
If it does, it probably won’t happen overnight. It takes years to build and activate a new nuclear power facility, but AI data centers need more electricity right now. A company like the aforementioned GE Vernova is seemingly better positioned to meet the more immediate need.
Just think bigger picture and longer term. GE Vernova’s natural gas power turbines are still mostly a stopgap solution. Indeed, the ramped-up consumption of natural gas they’re causing could also pump up the price of the commodity itself, ultimately making this particular on-premise option a less cost-effective one. Although it costs more up front, in the long run, nuclear power is achieving, or even exceeding, cost parity with alternatives.
And as it turns out, many nuclear power plants built decades ago are still functioning just fine, outlasting initial estimates of how long they’d remain viable. The U.S. Nuclear Regulatory Commission, or NRC, reports that some facilities initially licensed for up to 40 years could end up lasting 80. And that’s with an older design. Newer designs and materials could have even longer lifespans than the facilities being built and planned today.
Then there’s another development: Technology companies and public utilities are evolving beyond the typical customer/provider relationship to cultivate true partnerships. As an example, in late 2024, software giant Microsoft and power utility provider (and major nuclear power plant operator) Constellation Energy (CEG +1.39%) co-announced plans to restart one of the idle nuclear reactors at Pennsylvania’s Three Mile Island to provide power for one of Microsoft’s data centers.
Utility outfit Vistra (VST +1.18%) is also working directly with Amazon and Meta to provide nuclear power to some of their AI data centers, justifying Vistra’s investment in such facilities that will connect directly to the same power grid that serves retail customers.
If nothing else, it’s a testament to the flexibility of nuclear power and the possibility of prolonging or even expanding the power output of an existing nuclear power facility. It’s not like artificial data centers or the rest of the world are going to need less power in the future.
Just keep things in perspective
The point is, although the knee-jerk bullishness that sent Cameco shares soaring last year on the heels of AI’s explosion seems to have run its course (the stock’s been lackluster so far this year), that’s not necessarily the end of the story. That’s just the first of several chapters.
While the second act may not be nearly as exciting as the first one — and will take even longer to play out — it will be the one that separates the winners from the losers, based on profits or lack thereof. Cameco will almost certainly come out of this period as a winner, particularly once the nuclear power plants currently under construction go online and begin consuming enriched uranium.
Despite Cameco’s lethargic share performance this year, most members of the analyst community still rate this stock a strong buy, with an average target of $125.25, almost 30% more than now. That’s not a bad short-term tailwind to start a new long-term position with.
