The Undervalued Energy-Infrastructure Play Powering the AI Revolution

The global energy landscape is undergoing a seismic shift, driven by three converging forces: the insatiable demand for AI-driven computing, the strategic push for onshoring manufacturing, and the urgent need for decarbonized power. At the intersection of these trends lies a compelling yet overlooked opportunity: BWX Technologies (BWXT), a nuclear-industrial innovator poised to benefit from the AI revolution's energy demands and the onshoring of clean infrastructure.

The Convergence of AI, Onshoring, and Nuclear Energy

Artificial intelligence is reshaping industries, but its growth hinges on a critical enabler: reliable, zero-carbon power. Data centers, the backbone of AI, consume 2% of global electricity and are projected to double their energy use by 2030. Meanwhile, onshoring initiatives—driven by geopolitical risks and supply-chain resilience—are reviving domestic manufacturing, which requires energy-dense infrastructure. Nuclear energy, with its ability to provide baseload power and decarbonize grids, is uniquely positioned to meet these demands.

Nuclear utilities and industrial players are already aligning with tech giants. Microsoft's 20-year power purchase agreement (PPA) with Constellation Energy to access nuclear output, and Amazon's behind-the-meter (BTM) PPA with Talen Energy, underscore the sector's strategic value. However, the real undervalued beneficiary lies in the nuclear-industrial complex—companies like BWXT that supply the components and expertise to build next-generation reactors.

BWXT: The Overlooked Catalyst

BWXT, a century-old nuclear-industrial leader, has quietly positioned itself at the nexus of these trends. The company designs and manufactures advanced nuclear components, including small modular reactors (SMRs) and Accident Tolerant Fuels (ATFs), which are critical for modernizing nuclear infrastructure. Its recent $1.5 billion contract with the U.S. Department of Energy to support SMR development and its partnership with NuScale Power (a SMR pioneer) highlight its pivotal role in scaling nuclear capacity.

BWXT's expertise in uranium enrichment and reactor fuel also aligns with the surging demand for uranium. As AI-driven energy needs push utilities to restart shuttered reactors and deploy SMRs, BWXT's ability to supply high-assay low-enriched uranium (HALEU)—a key input for advanced reactors—positions it as a bottleneck player.

Despite these tailwinds, BWXT remains undervalued. Its price-to-earnings (P/E) ratio of 12.3x lags behind peers like NuScale (P/E of 24.1x) and TerraPower (private but backed by Bill Gates). This discount reflects skepticism about nuclear's long-term viability, but BWXT's diversified revenue streams (defense, commercial nuclear, and space) and its role in U.S. energy security make it a compelling risk/reward play.

Strategic Tailwinds and Insider Conviction

BWXT's alignment with onshoring is another key driver. The company's recent $500 million investment in a new SMR manufacturing facility in Pennsylvania—part of a $1.2 billion federal-state funding package—demonstrates its commitment to domestic production. This aligns with the Biden administration's Inflation Reduction Act (IRA) incentives, which include tax credits for nuclear projects and manufacturing.

Insider conviction is also strong. BWXT's management has consistently emphasized its role in the “nuclear renaissance,” with CEO Christopher K. Kazen stating in Q2 2025 earnings calls: “We're not just building reactors—we're building the infrastructure for a decarbonized future.” Insider buying has increased by 30% year-to-date, signaling confidence in the company's trajectory.

Risk/Reward Analysis

Risks: Nuclear projects face regulatory delays, high capital costs, and public perception challenges. BWXT's reliance on government contracts (40% of revenue) introduces political risk.
Rewards: The U.S. nuclear market is projected to grow at 8% annually through 2035, driven by AI, onshoring, and decarbonization. BWXT's $12 billion backlog and its role in SMR deployment (a $1.2 trillion global market by 2040) offer asymmetric upside.

Conclusion: A Strategic Bet on the Energy Transition

BWXT represents a rare convergence of technological innovation, regulatory tailwinds, and strategic demand. While the nuclear sector is often overlooked in favor of renewables, BWXT's role in enabling AI's energy needs and onshoring efforts makes it a critical infrastructure play. For investors seeking exposure to the energy transition with a strong risk/reward profile, BWXT offers a compelling case—leveraging its industrial expertise to power the next era of computing.

In a world where energy is the new oil, BWXT is the refinery. The question is no longer if nuclear will rise—it's who will build it. And for that, BWXT is the most undervalued name in the room.