The U.S. Just Put $17.5 Billion Behind a Nuclear Comeback. These Stocks Could Benefit.

The Department of Energy is putting significant money behind a nuclear comeback. The agency unveiled up to $17.5 billion in conditional loan commitments to help utilities buy long-lead components for new reactors using Westinghouse's AP1000 technology, with the program explicitly tied to data center electricity demand. The move is arguably the clearest signal yet that the federal government views advanced nuclear as part of the answer to the AI build-out's power problem.

The specific utilities that will draw on the program have not been named. But the structure of the loans -- long-lead components for Westinghouse's AP1000 reactors -- points to a narrow set of likely beneficiaries.

Here are three nuclear-exposed stocks worth watching.

Image source: Getty Images.

Cameco

Cameco (NYSE: CCJ) is probably the most direct play on the Westinghouse reactor fleet.

The Canadian uranium producer co-owns Westinghouse with Brookfield Renewable Partners, giving it a stake in both the fuel supply and the reactor technology that the loan program is designed to support. Every new AP1000 that gets built on the back of these loans could be a long-term demand driver for Cameco's uranium business and its Westinghouse stake.

Cameco's position is unique among the likely beneficiaries because it sits on both sides of the transaction. The company supplies uranium and fuel services and owns a stake in the company that designs and procures equipment for new reactors.

The risk is that the loan program is conditional, and the timelines on new nuclear builds are measured in years, not quarters.

Additionally, Cameco's near-term earnings will not be affected by this announcement, but the long-term demand picture could improve materially if even a portion of the $17.5 billion is deployed.

Constellation Energy

Constellation Energy (NASDAQ: CEG) is the largest nuclear fleet operator in the United States, and it has been the most visible utility in the data center power narrative.

Indeed, the company's existing nuclear plants are already being monetized through power purchase agreements with hyperscalers, including a high-profile deal to supply Microsoft's data center operations. And the DOE loan program could eventually extend that thesis to new builds.

The bull case for Constellation is that new nuclear capacity -- built with federal support -- could somewhat lock in years of contracted revenue at premium prices.

The risk is execution. New nuclear builds in the United States have a poor track record. The only AP1000s completed in the last decade, at Vogtle in Georgia, ran years late and billions over budget. Constellation's willingness to take on that risk will depend on the structure of federal support and on data-center customers' willingness to sign long-term contracts at prices that justify the build. And the conditional nature of the loans means none of this is settled yet.

Vistra

Vistra (NYSE: VST) rounds out the list. The Texas-based power producer has built one of the largest clean-generation fleets in the country, including a meaningful nuclear footprint acquired through its merger with Energy Harbor.

Vistra's stock has been one of the best performers in the power sector over the last two years, driven by the same data-center thesis that sits behind the DOE program.

Vistra's appeal is that it offers a combination of contracted nuclear capacity and a fast-growing retail business, with the balance sheet to take on new power generation if the economics work.

The company has been more cautious than Constellation about committing to new nuclear builds, but the DOE loan program could change the calculus by reducing the upfront capital risk.

What the program really means

Of course, it's worth emphasizing that the $17.5 billion is not a check. It is a conditional loan commitment, meaning utilities must apply, qualify, and commit to building before any funds move.

The structure is designed to derisk long-lead component purchases, which have historically been a bottleneck for new nuclear in the United States. And for the three companies above, the program is more of a potential long-term tailwind -- not a sure catalyst. The more direct catalysts -- signed offtake agreements with data-center customers, construction start dates, and final loan closings -- are still ahead.

So, what should investors do?

While this loan program likely does bolster these stocks' bull cases, their massive gains over the past five years have made their valuations difficult to justify. Additionally, there's still considerable uncertainty surrounding this federal loan announcement and the timelines for new reactors.

I'll be staying on the sidelines, looking for more predictable investments.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cameco, Constellation Energy, Microsoft, and Vistra. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.