As Meta, Microsoft Take the Nuclear Option, Investors Better Get Plugged In
These tech giants are hungry for power, and this surprising energy name looks like it could offer electrifying returns...
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Metal Health
I'm like a laser, six-string razor
I got a mouth like an alligator
I want it louder. more power
I'm gonna rock it 'til it strikes the hour
Bang your head....
- Banali, Cavazo, Cavazo, Dubrow (Quiet Riot), 1983
More Power?
No kidding. Social media, hyper-scaling tech giant Meta Platforms META has signed a 20-year agreement to buy nuclear energy from Constellation Energy CEG to power up its growing demand for electricity. Starting in June 2027, Meta will purchase about 1.1 gigawatts of energy from Constellation's facility in Clinton, Illinois. This would equal the entire output from that location's one nuclear reactor.
According to CNBC, that facility was in danger of being closed when its state-funded zero-emission credits expired. Now, it gets a two-decade lease on life. According to the Wall Street Journal, this is the first deal of its kind in the United States but does bear some similarities to a deal struck last year between Constellation and Microsoft MSFT, which involves the restarting of the undamaged reactor at the Three Mile Island facility in Pennsylvania. That plant was the site of the worst nuclear power plant accident in U.S. history.
With the tremendous increase in demand for power associated with data center build-outs, with the advance of generative AI and with the eventual uptick in demand likely to be associated with quantum computing, all of the hyper-scalers are on the hunt for sources of electricity adjacent to, but necessarily as a draw on the grid already in place. That grid is already under stress due to business and residential needs across just about every community in the nation. In March of last year, Meta along with Amazon AMZN and Alphabet GOOGL all signed a pledge led by the World Nuclear Association that called for global production of nuclear energy to triple by the year 2050. Did I mention that CEG is up 10% overnight and has been up considerably more.
Who Else Plays This Game?
There are several names that either provide nuclear power directly, or broker power, or manufacture the equipment necessary to provide such power. Vistra Corp VST is an Irving, Texas-based operation that provides essential resources to clients nationwide. The company provides power driven by a number of sources including natural gas, coal, solar and of course nuclear reactors. This stock is up more than 4% overnight in sympathy with CEG.
Oklo OKLOF is another name reacting well to the CEG news. The New York based company is engaged in the development of fast fission power plants to provide clean, and affordable energy at scale. The company is also working with the Department of Energy to develop advanced fuel recycling technologies.
There are also a few other names such as NRG Energy NRG, Exelon EXC, and NuScale Power SMR. Personally, I have a small, long position in GE Vernova GEV, whose power segment designs, manufactures, and services gas, hydro, nuclear, and steam technologies with an aim towards providing efficient, and reliable power. The best chart in the group, though, in my opinion belongs to OKLO. Check this out...
OKLO Chart
Readers will see an almost perfectly formed cup-with-handle pattern here with a $57 pivot. The stock is trading at $55 and change early on Tuesday after closing at $52.44 on Monday.
The operation is very small at this time. No operating income to speak of, but also no debt to speak of. Technically, Relative Strength is extended and the daily Moving Average Convergence Divergence is postured very bullishly. I would like to buy this stock, but only under two conditions:
1) The stock takes out the pivot and trades higher on momentum.
2) The stock fails at pivot and adds depth to the development of that handle.
Behind Door Number Two...
In other words, there's no need to initiate OKLO just yet. One can be patient. You want beefy operating and free cash flows, a strong balance sheet, and still no debt to speak of, you can join me in GEV.
The only problem there is that GEV exploded out of a double-bottom pattern of bullish reversal in early April and never looked back. To initiate or add, one might want to wait for a test of at least the 21-day exponential moving average. In fact, someone long the shares might use this morning's strength to make a sale and then try to repurchase when that swoon does appear.
At the time of publication, Guilfoyle was long MSFT, GEV equity.
