Small Modular Reactors: Powering the AI Revolution and Unlocking New Investment Opportunities

The global energy landscape is undergoing a seismic shift as artificial intelligence (AI) redefines the scale and intensity of data center operations. By 2030, AI-driven data centers are projected to consume 945 terawatt-hours (TWh) of electricity annually—nearly double the 2025 baseline. This surge in demand, driven by large language models and high-performance computing, is creating a critical need for reliable, low-carbon power sources. Enter Small Modular Reactors (SMRs), a technology poised to bridge the gap between AI's insatiable energy appetite and the limitations of traditional grids. For investors, the intersection of SMRs and AI data centers represents a high-conviction opportunity at the nexus of policy, innovation, and market demand.

The AI Energy Imperative: A $Trillion-Plus Market

AI's energy demands are no longer theoretical. In 2025, data centers already account for 1.5% of global electricity consumption, with AI workloads consuming 30% of that total. Goldman Sachs estimates this share will rise to 27% by 2027, as hyperscalers like Microsoft, Amazon, and Google deploy AI infrastructure at unprecedented scale. The U.S. alone is projected to require 2,000 megawatts (MW) of power for the largest AI data centers—equivalent to a mid-sized nuclear plant.

The challenge is twofold: capacity and carbon neutrality. Renewable energy sources like solar and wind, while essential, struggle to meet the 24/7, high-capacity needs of AI workloads. Nuclear energy, particularly SMRs, offers a compelling alternative. Unlike traditional reactors, SMRs are modular, scalable, and designed for rapid deployment. NuScale's uprated 77 MWe Power Module, for instance, can be scaled to 924 MWe (12 modules), matching the output of a large coal plant while producing zero emissions.

SMRs: A Strategic Fit for AI Data Centers

SMRs are uniquely positioned to address the energy needs of AI data centers. Their modular design allows for incremental deployment, aligning with the phased expansion of data center infrastructure. For example, a single NuScale module can power a mid-sized AI campus, while multiple units can scale to meet the demands of hyperscale operations. This flexibility is critical in regions with constrained grid infrastructure, such as rural areas or emerging markets.

Moreover, SMRs offer grid resilience. AI data centers require uninterrupted power to avoid costly downtime. SMRs, with their passive safety systems and high capacity factors (90%+), provide a stable baseload power source. This is particularly attractive in regions where renewable energy intermittency or fossil fuel volatility pose risks.

Policy and Capital: The Twin Engines of SMR Growth

The SMR industry is accelerating, driven by policy tailwinds and private-sector investment. The U.S. Nuclear Regulatory Commission (NRC) has streamlined approvals for SMRs, with NuScale's uprated design certified in 2025. Internationally, over 80 SMR designs are in development, with countries like Canada, the UK, and South Korea offering subsidies and regulatory support.

Investor interest is surging. Microsoft's $1.6 billion investment in restarting the Three Mile Island reactor and Amazon's $500 million stake in X-energy highlight the tech sector's bet on nuclear. Meanwhile, SMR developers like NuScale Power (NUSC) and Rolls-Royce SMR are securing funding rounds and partnerships. For example, NuScale's ENTRA1 Energy Plants are on track for 2030 deployment, with a projected cost of $3.10 per kilowatt-hour (kWh)—competitive with renewables and fossil fuels.

Strategic Entry Points for Investors

For investors, the SMR-AI data center nexus offers multiple entry points:

1. SMR Developers: Early-stage SMR companies like Oklo (OKLO) and Terrestrial Energy are leveraging venture capital and government grants. These firms are high-risk but offer outsized returns if their designs achieve commercialization.
2. Tech Giants with Nuclear Ambitions: Microsoft, Amazon, and Google are not just consumers of SMR energy—they are investors and partners in reactor development. Their stock valuations reflect long-term bets on energy infrastructure.
3. Infrastructure and Supply Chain: SMRs require specialized components, from reactor materials to grid integration systems. Firms like Babcock & Wilcox (BCX) and Westinghouse Electric are positioned to benefit from increased demand.
4. Policy-Driven ETFs: Exchange-traded funds focused on clean energy or nuclear innovation, such as the Nuclear Energy ETF (NLR), provide diversified exposure to the sector.

Risks and Mitigations

SMRs are not without challenges. First-of-a-kind costs remain high, with initial units projected to cost $5–7 per kWh—above current renewables. However, economies of scale and factory-based production (NuScale's modules are 80% factory-built) are expected to drive costs down to $3–4 per kWh by 2035. Regulatory delays and public perception of nuclear energy also pose risks, though the NRC's recent efficiency gains and AI's carbon-neutrality imperative are mitigating these concerns.

The Long Game: SMRs as a $1 Trillion Market

The IEA estimates that SMRs could reach 120 gigawatts (GW) of global capacity by 2050, with annual electricity output exceeding 146 terawatt-hours (TWh). At current energy prices, this represents a $1 trillion market opportunity. For investors, the key is to act early—before SMRs transition from niche innovation to mainstream infrastructure.

Conclusion: A Power Play for the AI Era

The convergence of AI's energy demands and SMRs' scalability is not a distant future—it is unfolding now. As data centers become the new industrial powerhouses of the 21st century, SMRs offer a path to decarbonize their operations while ensuring reliability. For investors, the time to act is now, with a focus on companies and policies that are shaping this energy transition. The next decade will define the role of nuclear power in the digital age—and those who position themselves today will reap the rewards of a cleaner, more powerful tomorrow.