What does a uranium firm have to do with AI? As it happens—a lot. NexGen Energy (NYSE: NXE), a uranium exploration and development company, is an unconventional yet savvy investment opportunity related to the AI boom. AI needs a lot of energy. The connection between NXE and AI lies in the enormous power consumption required by advanced AI technologies and data centers.
AI's increasing energy demands are straining power grids. The need for more energy is boosting the appeal of nuclear energy due to its reliability and low carbon emissions. Nuclear fuel's high energy density makes it a promising solution for growing energy needs.
Who Is NexGen?
Founded in 2011, NexGen Energy Ltd. is a Canadian company focused on clean energy fuel. It’s in its exploration and development phase, acquiring, exploring, and evaluating uranium development properties in Canada. Industry experts expect the global uranium mining market to reach $11.38 billion by 2030, growing at a 4% CAGR. One strong positive for the company is its location. Geopolitical factors favor uranium producers in stable, friendly jurisdictions like Canada.
NexGen’s objectives include minimizing the environmental impact of its projects, social responsibility, and global clean energy adoption. Although the company focuses on raw materials, such as its development of the largest Canadian development-stage uranium project, there is no denying that AI data centers will benefit. One concern is the massive amount of energy required for AI computing and the environmental impact. NexGen’s technology addresses this concern.
Looking Forward
Although NexGen is currently pre-revenue, analysts project modest sales by the end of FY 2024. However, its current valuation metrics appear incredibly high based on projected revenues. As of July 12, NXE’s market cap was $4.07 billion, a 77.88% increase from 2023. It has a trailing price-to-earnings ratio of -61.7412. The current share price is $6.545, with a consensus Strong Buy rating and a price target of $9.41.
The rising demand for uranium driven by AI energy consumption could provide long-term growth potential, although this stock is highly speculative. Investors should view NXE stock as a risky but potentially rewarding investment.
Neither Julie Stoller nor Stocks.News have positions in this company.
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Contributing Writer
As a professional writer since 2012, Julie Stoller has covered many industries, from healthcare and technology to consumer products and industrials. She has written about IPOs, spinoffs, ETFs, stock splits, commodities, legislative actions impacting investors, and macroeconomic issues. While keeping up with the latest meme stocks and trends, Julie's special interests are discovering ...