Are These Nuclear Energy Stocks No-Brainer Buys Right Now?

What's the most critical component to the artificial intelligence (AI) boom? Some might say Nvidia's (NASDAQ: NVDA) GPUs. Others could suggest continually improving large language models from Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Anthropic, and OpenAI.

However, I think the best answer to the question is electricity. Without electricity, we would have no AI. We would also have no air conditioning, internet, smartphones, or TV.

Thanks to AI's seemingly insatiable need for more power, nuclear energy is making an impressive comeback. So are nuclear energy stocks. But not all nuclear energy stocks are equal. Some are practically no-brainer picks, and some aren't.

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Constellation Energy: The industry king

Any discussion of nuclear energy stocks should begin with Constellation Energy (NASDAQ: CEG). The company is the world's largest non-government power producer. It's also the largest nuclear energy company in the U.S., providing power to around 2.5 million customers -- including 75% of the Fortune 100.

Constellation's acquisition of Calpine earlier this year was a game changer for the company. Calpine is a leading producer of natural gas and geothermal electric power. The deal further diversified Constellation's portfolio of clean energy assets.

One key thing for investors to like about Constellation Energy's business is that it has direct power purchase agreements with tech giants Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META). Both are 20-year agreements that lock in predictable long-term revenue.

If there's any no-brainer nuclear energy stock to buy, it's Constellation Energy. Building a nuclear power plant requires billions of dollars, years of construction, and jumping through regulatory hurdles. Constellation's scale gives it an unmatched moat in the nuclear energy industry. It just might be the ultimate electric utility stock for the AI era.

Cameco: a uranium juggernaut

Nuclear reactors run by Constellation Energy (or any of its rivals) couldn't generate a single watt of electricity without uranium. Investors looking for a different angle to capitalize on the nuclear energy renaissance might want to check out Cameco (NYSE: CCJ). The Canadian company is the largest uranium mining stock by market cap and the world's second-largest uranium producer, trailing only Kazakhstan-based Kazatomprom.

Cameco is the strongest candidate to be a no-brainer stock to buy in the uranium mining space. Its assets include the McArthur River and Cigar Lake mines in Canada, which together provide around 24% of the world's uranium supply. And with Kazakhstan's close ties with Russia, Cameco is more attractive to U.S. and European nuclear power companies.

The wildcards

The stocks of companies operating Small Modular Reactors (SMRs) have become intriguing to some investors in recent years. Although SMRs can generate only around one-third the capacity of traditional nuclear power reactors, their small size and modularity allow them to be installed at sites that aren't suitable for larger plants. They're more cost-effective than traditional nuclear power facilities. SMRs also enable incremental capacity increases as demand grows.

Oklo (NYSE: OKLO) and NuScale Power (NYSE: SMR) are two of the most prominent pure-play SMR stocks. However, these stocks are also much more volatile than big nuclear energy players like Constellation Energy and Cameco.

Importantly, neither Oklo nor NuScale Power are profitable yet. Although both stocks could have tremendous upside over the next decade, they don't meet the threshold to be no-brainer stocks for most investors.

Smart AI pick-and-shovel plays.

I think that the true no-brainer nuclear energy stocks are industry leaders that are already generating strong cash flow. Constellation Energy and Cameco fit the bill. These two companies help keep AI data centers running. Both stocks could be smart pick-and-shovel plays for long-term investors looking to profit from the AI boom.

Keith Speights has positions in Alphabet, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Cameco, Constellation Energy, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.