Undervalued Energy Infrastructure Plays in the AI Era: BWX Technologies and the Quiet Revolution in Nuclear Power

The global energy landscape is undergoing a seismic shift, driven by the insatiable demand for computing power from artificial intelligence (AI), the resurgence of U.S. onshoring, and the urgent need for decarbonization. Amid this transformation, one company stands out as a hidden beneficiary: BWX Technologies (BWXT). While the spotlight often shines on renewables or tech giants, BWXT operates in a critical but overlooked sector—nuclear energy—positioning itself to profit from AI's energy surge, geopolitical tailwinds, and the U.S. push for energy security.

The AI-Driven Energy Surge and Nuclear's Quiet Resurgence

AI's exponential growth has created a voracious appetite for electricity. Data centers, which already consume 2% of global electricity, are projected to double their energy use by 2030. This demand is not just a technical challenge but a strategic imperative. Governments and corporations are racing to secure reliable, low-carbon power to fuel AI infrastructure, electrification, and onshored manufacturing. Nuclear energy, with its 92%+ capacity factor and zero-carbon output, is uniquely positioned to meet this need.

BWXT, a century-old nuclear-industrial innovator, is at the forefront of this renaissance. The company designs and manufactures advanced nuclear components, including small modular reactors (SMRs) and Accident Tolerant Fuels (ATFs). Its recent $1.5 billion contract with the U.S. Department of Energy to support SMR development, coupled with a partnership with NuScale Power, underscores its pivotal role in scaling U.S. nuclear capacity.

BWXT's Strategic Positioning: A Convergence of Tailwinds

1. AI and Onshoring Alignment: BWXT's expertise in uranium enrichment and reactor fuel production aligns with the surging demand for reliable power. Its ability to supply high-assay low-enriched uranium (HALEU)—a critical input for advanced reactors—positions it as a bottleneck player in the nuclear renaissance.
2. Government Incentives and Onshoring: The 2022 Inflation Reduction Act (IRA) has turbocharged nuclear growth through tax credits, with BWXT benefiting from both Production Tax Credit (PTC) and Investment Tax Credit (ITC). The company's $500 million investment in a Pennsylvania SMR manufacturing facility, supported by a $1.2 billion federal-state funding package, exemplifies its commitment to U.S. onshoring.
3. Valuation Discount: BWXT trades at a 12.3x P/E ratio, significantly below peers like NuScale Power (24.1x). This discount reflects lingering skepticism about nuclear's long-term viability but overlooks BWXT's diversified revenue streams (defense, commercial nuclear, space) and its role in U.S. energy security.

Geopolitical Tailwinds and the Nuclear Arms Race

The U.S. faces a growing challenge: China and Russia dominate global nuclear construction and fuel supply. BWXT's role in advancing domestic nuclear technology is not just economic but strategic. The company's SMR projects and HALEU production capabilities align with U.S. efforts to reduce reliance on foreign energy sources and secure a leadership role in next-generation nuclear technology.

Risks and Rewards: A Calculated Bet

BWXT is not without risks. Nuclear projects face regulatory delays, high capital costs, and political dependencies. However, 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 a $1.2 trillion global SMR market by 2040 provide asymmetric upside potential.

Why BWXT is a High-Conviction Play

• Asymmetric Risk/Reward: BWXT's valuation discount contrasts with its strategic positioning in a sector poised for decades-long growth.
• Policy Tailwinds: The IRA and bipartisan support for nuclear energy create a favorable regulatory environment.
• Insider Conviction: Insider buying has increased by 30% year-to-date, signaling strong internal confidence.

Conclusion: Powering the AI Era, One Reactor at a Time

BWXT represents a rare convergence of technological innovation, policy support, and macroeconomic tailwinds. As AI-driven energy demand surges and the U.S. prioritizes onshoring and energy security, BWXT is uniquely positioned to deliver outsized returns. For investors seeking a high-conviction, long-term play in the energy transition, BWXT offers a compelling case: a company building the infrastructure of the future while trading at a valuation that ignores its potential.

In an era where energy is the new oil, BWXT is the overlooked refiner. The question is not whether AI will reshape the world, but who will power it. For BWXT, the answer is already being written in uranium.