You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Uranium's Price Dip Signals Opportunity? ETFs in Focus
Read MoreHide Full Article
Being an essential component in sustainable and reliable energy generation, uranium plays a crucial role in shaping the future of energy security. The growing interest in nuclear energy has led to an optimistic outlook for the commodity.
The increasing focus on finding alternative energy sources and diminishing global reliability on fossil fuels has resulted in a surge in demand for uranium. Given its pivotal role in the global energy landscape, uranium prices stand as a critical subject for investors and policymakers.
Uranium prices crossed the $100 mark in early 2024 but have since been declining, presenting a buy-the-dip opportunity for investors. Driven by the global shift toward clean energy and the increasing energy demands of AI, bullish factors favor a future surge in prices.
Clean Energy Shift and New Reactors Fuel Uranium Demand Surge
To achieve net-zero emissions, nuclear power is becoming a vital solution, bridging the energy gap with its clean, scalable and reliable nature. With uranium being one of the cleanest ways to produce electricity, growing energy concerns and the increasing need for dependable and eco-friendly energy sources are fueling a surge in demand for the commodity.
As global economies push for a transition to cleaner energy sources, the demand for more nuclear reactors grows. According to BMO Capital Markets, as quoted on Mining.com, fueled by China's push for new reactor construction and potential reactor restarts in North America, uranium demand is expected to rise by 2.9% yearly through 2035.
High costs and project management have always been areas of concern negatively affecting large nuclear plants, often leading to budget overruns and delays. However, the growing interest in small modular reactors (SMRs) could address these challenges, driving increased demand for uranium.
According to CNBC, nuclear plants could evolve to be smaller, simpler and easier to construct, speeding up the deployment of new plants to meet the rising clean energy demand.
AI Fueling a Rise in Uranium Demand
Companies like Amazon and others are facing the challenge of meeting AI's insatiable energy needs. Per Yahoo Finance, Big Tech companies like Microsoft and Amazon are projected to spend around $189 billion on AI in 2024. With a surge in AI applications and increased corporate spending, demand for data center capacity to support AI workloads also gets fueled.
Data centers are energy-intensive and with AI applications consuming even more energy than traditional computing, most of the tech giants are transitioning to relying on renewable energy to support their power needs.
According to Yahoo Finance, forecasts suggest that global AI-related electricity consumption could surge by 64% by 2027, reaching up to 134 terawatt hours annually. This is equivalent to the electricity usage of countries like the Netherlands or Sweden.
As big tech companies ramp up their AI development efforts and the global AI market is poised for exponential growth, the resulting surge in energy demand makes investing in cleaner energy sources crucial.
ETFs in Focus
Investors in uranium have faced challenges recently, but signs of a market recovery are emerging. According to Citi, as quoted on the Market Index, uranium prices are expected to rebound later in 2024, reaching $98 per pound.
The momentum is projected to continue into 2025, with uranium prices crossing the $100 mark, especially following a rebound in 2024's third and fourth quarters. Citi remains strategically optimistic about the commodity in both the near and mid terms.
Below, we highlight pure-play ETFs for investors to capitalize on the metal’s growth trajectory.
Global X Uranium ETF has gained 14.56% over the past year but has lost 19.58% over the past three months. However, the fund has been trending upward since the first week of September, rising about 9.30% (as of Sept. 11).
Sprott Uranium Miners ETF has gained 12.33% over the past year but has lost 26.29% over the past three months. However, the fund has been trending upward since the first week of September, rising about 10% (as of Sept. 11).
Sprott Junior Uranium Miners ETF has gained 3.21% over the past year but has lost 31.97% over the past three months. However, the fund has been trending upward since the first week of September, rising about 14% (as of Sept. 11).
VanEck Uranium+Nuclear Energy ETF has gained 23.27% over the past year but has lost 12.86% over the past three months. However, the fund has been trending upward since the first week of September, rising about 6.10% (as of Sept. 11).
In-Depth Zacks Research for the Tickers Above
Normally $25 each - click below to receive one report FREE:
Being an essential component in sustainable and reliable energy generation, uranium plays a crucial role in shaping the future of energy security. The growing interest in nuclear energy has led to an optimistic outlook for the commodity.
The increasing focus on finding alternative energy sources and diminishing global reliability on fossil fuels has resulted in a surge in demand for uranium. Given its pivotal role in the global energy landscape, uranium prices stand as a critical subject for investors and policymakers.
Uranium prices crossed the $100 mark in early 2024 but have since been declining, presenting a buy-the-dip opportunity for investors. Driven by the global shift toward clean energy and the increasing energy demands of AI, bullish factors favor a future surge in prices.
Clean Energy Shift and New Reactors Fuel Uranium Demand Surge
To achieve net-zero emissions, nuclear power is becoming a vital solution, bridging the energy gap with its clean, scalable and reliable nature. With uranium being one of the cleanest ways to produce electricity, growing energy concerns and the increasing need for dependable and eco-friendly energy sources are fueling a surge in demand for the commodity.
As global economies push for a transition to cleaner energy sources, the demand for more nuclear reactors grows. According to BMO Capital Markets, as quoted on Mining.com, fueled by China's push for new reactor construction and potential reactor restarts in North America, uranium demand is expected to rise by 2.9% yearly through 2035.
High costs and project management have always been areas of concern negatively affecting large nuclear plants, often leading to budget overruns and delays. However, the growing interest in small modular reactors (SMRs) could address these challenges, driving increased demand for uranium.
According to CNBC, nuclear plants could evolve to be smaller, simpler and easier to construct, speeding up the deployment of new plants to meet the rising clean energy demand.
AI Fueling a Rise in Uranium Demand
Companies like Amazon and others are facing the challenge of meeting AI's insatiable energy needs. Per Yahoo Finance, Big Tech companies like Microsoft and Amazon are projected to spend around $189 billion on AI in 2024. With a surge in AI applications and increased corporate spending, demand for data center capacity to support AI workloads also gets fueled.
Data centers are energy-intensive and with AI applications consuming even more energy than traditional computing, most of the tech giants are transitioning to relying on renewable energy to support their power needs.
According to Yahoo Finance, forecasts suggest that global AI-related electricity consumption could surge by 64% by 2027, reaching up to 134 terawatt hours annually. This is equivalent to the electricity usage of countries like the Netherlands or Sweden.
As big tech companies ramp up their AI development efforts and the global AI market is poised for exponential growth, the resulting surge in energy demand makes investing in cleaner energy sources crucial.
ETFs in Focus
Investors in uranium have faced challenges recently, but signs of a market recovery are emerging. According to Citi, as quoted on the Market Index, uranium prices are expected to rebound later in 2024, reaching $98 per pound.
The momentum is projected to continue into 2025, with uranium prices crossing the $100 mark, especially following a rebound in 2024's third and fourth quarters. Citi remains strategically optimistic about the commodity in both the near and mid terms.
Below, we highlight pure-play ETFs for investors to capitalize on the metal’s growth trajectory.
Global X Uranium ETF (URA - Free Report)
Global X Uranium ETF has gained 14.56% over the past year but has lost 19.58% over the past three months. However, the fund has been trending upward since the first week of September, rising about 9.30% (as of Sept. 11).
Sprott Uranium Miners ETF (URNM - Free Report)
Sprott Uranium Miners ETF has gained 12.33% over the past year but has lost 26.29% over the past three months. However, the fund has been trending upward since the first week of September, rising about 10% (as of Sept. 11).
Sprott Junior Uranium Miners ETF (URNJ - Free Report)
Sprott Junior Uranium Miners ETF has gained 3.21% over the past year but has lost 31.97% over the past three months. However, the fund has been trending upward since the first week of September, rising about 14% (as of Sept. 11).
VanEck Uranium+Nuclear Energy ETF (NLR - Free Report)
VanEck Uranium+Nuclear Energy ETF has gained 23.27% over the past year but has lost 12.86% over the past three months. However, the fund has been trending upward since the first week of September, rising about 6.10% (as of Sept. 11).