CONTRIBUTORS
Serena Perin Vinton, CFA
Portfolio Manager
Franklin Equity Group
Joyce Lin, CFA
Co-director of Research, Portfolio Manager and Research Analyst
Franklin Equity Group
Robert Rendler, CFA
Portfolio Manager and Research Analyst
Franklin Equity Group
Preview
As technology giants increasingly turn to nuclear energy to power the energy-intensive data centers essential for training and running today’s advanced artificial intelligence (AI) models, the potential for expanded nuclear capacity is becoming more apparent. This shift could significantly transform the energy landscape, not only for the tech industry, but also for US businesses and manufacturing. In this paper, Franklin Equity Group delves into the implications, challenges and opportunities of a potential nuclear renaissance in the United States.
Key takeaways:
- The AI revolution, with its potential to generate US$2.6 trillion to US$4.4 trillion in economic value annually, is driving a renewed interest in nuclear energy production.1
- Tech companies are turning to nuclear power for its reliability and scalability, ensuring a stable energy supply to support AI technologies.
- While tech giants are leading the charge, increased investment in nuclear technology could have positive ripple effects across the broader industrial landscape.
- Recent DeepSeek news and the efficiency gains of the R1 model will likely further accelerate adoption of AI.
We believe nuclear energy will be crucial in meeting the rising domestic demand for electricity driven by AI and data center growth, reshoring, and a resurgence in US manufacturing and electrification across various industries. Although it is still early and challenges persist, we are confident that nuclear power will play a significant role in energy transformation over the next decade.
Endnotes
- Source: “The economic potential of generative AI: the next productivity frontier.” McKinsey Global Institute. June 14, 2023.
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Investment strategies which incorporate the identification of thematic investment opportunities, and their performance, may be negatively impacted if the investment manager does not correctly identify such opportunities or if the theme develops in an unexpected manner. Focusing investments in information technology (IT) and technology-related industries, carries much greater risks of adverse developments and price movements in such industries than a strategy that invests in a wider variety of industries.
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