NLR ETF

There are a variety of unofficial holidays marking various climate and environmental causes. More traditional energy sources, including nuclear, are often overlooked when it comes to celebratory occasions.

During the 28th COP28 Summit, something remarkable happened: Twenty countries have decided to triple their nuclear power production by 2050. The ETF has a high concentration in utilities and lacks significant positions in key uranium miners, reducing its appeal for uranium price gains. I prefer the Sprott Physical Uranium Trust for direct exposure to uranium prices, avoiding the ETF's issues with valuation.

Nuclear energy is experiencing a rebirth and shares of producers of this power source are going along for the ride. Just look at the VanEck Uranium and Nuclear ETF (NLR).

Nuclear energy's resurgence is driven by net-zero targets, AI energy demands, and SMR advancements, making it a compelling investment opportunity. The VanEck Uranium and Nuclear ETF offers exposure to companies in uranium mining, reactor construction, and nuclear infrastructure. Despite past industry challenges, innovations in SMRs and strong support from governments and tech leaders highlight nuclear's growth potential.

With tech giants ramping up their investments in AI, the increasing energy demands of data centers are driving a heightened need for nuclear power, creating an optimistic demand outlook for uranium. To capitalize, look at pure-play uranium ETFs.

Over the past few years, the phrase “nuclear renaissance” has been frequently used. And it's not hyperbole.

The VanEck Uranium and Nuclear Energy ETF is indexed to utilities with significant nuclear generation. Life extensions for nuclear assets are costly and don't necessarily benefit shareholders at all, or at least not much. We like nuclear energy but don't see unique benefits for NLR from AI PPA agreements or nuclear asset life extensions, except perhaps in the rare cases of a restart.

ETFs that track uranium miners and nuclear-energy stocks have skyrocketed in October, as some of the largest tech companies have tapped into nuclear power to fuel data centers as part of their AI push.

As the AI investment thesis increases in both size and merit, some market participants are looking for derivative plays. On that note, one of the ideas that's emerging with ample momentum is the utilities sector.