Morgan Stanley Boosts Nuclear Energy Investment Forecast to $2.2 Trillion, Names Top Picks

Morgan Stanley forecasts $2.2 trillion in nuclear energy investment by 2050, up from $1.5 trillion last year. The firm recommends Talen Energy, Public Service Enterprise Group, and Vistra as top nuclear-exposed stocks due to increasing demand for nuclear power from AI companies, limited capacity, and federal support. Morgan Stanley expects the "nuclear renaissance" to continue globally, driven by decarbonization and energy security imperatives.

Nuclear energy is poised for a significant resurgence, driven by increasing demand for clean, reliable power and substantial federal support. According to a recent report by Morgan Stanley, the nuclear energy sector is expected to receive $2.2 trillion in investments by 2050, a substantial increase from the $1.5 trillion seen in 2024 [1]. This growth is fueled by the rising demand for nuclear power from artificial intelligence (AI) companies, limited capacity, and robust federal backing.

The nuclear industry is experiencing a resurgence in the United States, with capacity projected to rise by 63% to 159 gigawatts (GW) by 2050, according to Bloomberg Intelligence [1]. This growth is expected to be driven by the increasing demand for reliable, carbon-free energy from AI data centers and policy support. The report projects a net addition of 61 GW in nuclear capacity between 2025 and 2050, lifting nuclear's share of US power generation to 20% from 18% in 2024.

Morgan Stanley recommends Talen Energy, Public Service Enterprise Group, and Vistra as top nuclear-exposed stocks due to their strong positions in the nuclear energy sector and the increasing demand for nuclear power. The firm expects the "nuclear renaissance" to continue globally, driven by decarbonization and energy security imperatives [1].

The nuclear industry is also benefiting from federal support. The Trump administration's executive orders aim to streamline reactor licensing and set a target of 400 GW of nuclear capacity by 2050. Additionally, the Inflation Reduction Act expanded nuclear tax credits and provided federal loan guarantees for new nuclear projects [1].

The nuclear energy sector is expected to close much of its cost gap with weather-dependent renewables after 2027, when key solar and wind tax credits expire. According to the Energy Information Administration (EIA), the levelized cost of electricity (LCOE) for new nuclear builds entering service in 2030 is expected to be $81.45 per megawatt-hour (MWh), compared to $29.58 for onshore wind, $31.86 for solar, and $53.44 for photovoltaic-battery hybrids [1].

The nuclear industry is also making strides in small modular reactors (SMRs). NuScale Power, for instance, has secured design certification from the U.S. Nuclear Regulatory Commission and is making significant strides in advancing SMR technology [2]. SMRs are expected to see substantial growth as they offer a more flexible and scalable solution compared to large reactors.

In conclusion, the nuclear energy sector is experiencing a resurgence driven by increasing demand, federal support, and advancements in technology. Investors and financial professionals should closely monitor the nuclear energy sector for significant growth opportunities.

References:
[1] https://www.bloomberg.com/professional/insights/artificial-intelligence/ai-boom-may-drive-over-60-surge-in-us-nuclear-capacity-by-2050/
[2] https://www.tradingview.com/news/zacks:abf7aaf8d094b:0-nuclear-stocks-shine-as-demand-for-zero-carbon-energy-accelerates/