Hedge funds are increasingly investing in nuclear power producers, aiming to capitalise on the anticipated electricity surge driven by artificial intelligence (AI), according to a report by Morningstar citing Goldman Sachs analysis of 697 funds managing over $3tn in assets.

In the third quarter of 2024, money managers expanded their positions in nuclear energy stocks, even as they reduced holdings in other energy and infrastructure companies expected to benefit from the AI boom, marking a strategic shift as the AI sector’s rapid growth fuels demand for reliable, large-scale power sources.

Major tech firms, including Meta Platforms (META) and Alphabet (GOOGL), have indicated that new nuclear facilities, which provide consistent, high-capacity power without carbon emissions, could play a key role in meeting their energy-intensive AI workloads.

The trend has catapulted companies like Vistra Corp (VST) and Talen Energy Corp (TLN) into the spotlight.

Vistra Corp, a Texas-based power producer, operates 6.4 gigawatts of nuclear capacity across facilities such as Comanche Peak (Texas), Beaver Valley (Pennsylvania), and Davis-Besse (Ohio). The company recently earned a spot on Goldman Sachs' Hedge Fund VIP list, which tracks the most popular hedge fund holdings.

Talen Energy, meanwhile, another Texas-based operator, owns the 2.7 GW Susquehanna Steam Electric Station in Pennsylvania. Earlier this year, the company secured a $650m deal with Amazon Web Services (AWS) to power a data centre with electricity from its Pennsylvania nuclear facility.