Nuclear funds pivot as tech giants lock in reactor contracts
Nuclear ETFs are pulling back after a three-year uranium rally, but a shift toward long-term power purchase agreements with tech giants is reshaping how investors should value the sector.
The three main funds tracking the nuclear energy sector are down 10% to 14% over the past month as the market digests a fundamental shift in the trade's underlying logic. The Sprott Uranium Miners ETF (URNM), VanEck Uranium and Nuclear ETF (NLR), and Range Nuclear Renaissance Index ETF (NUKZ) are no longer moving solely on uranium spot prices.
After three years of gains driven by a rerating in the U3O8 spot price, the nuclear trade is entering a second phase. The new catalysts are concrete: reactor restarts at Palisades and Three Mile Island's Crane Clean Energy Center, and small modular reactors advancing from announcements to the permitting stage.
This pivot is driven by a structural change in U.S. power demand. Commercial electricity consumption is forecast to surpass residential use for the first time on record in 2027. Data center expansion in Texas and the broader West South Central region is the primary driver, with industrial electricity demand expected to grow 1% in 2026 and 4% in 2027.
Nuclear generation is forecast to hold steady at an 18% share of U.S. electricity in both 2026 and 2027, but the composition of its buyers is transforming the sector's economics. Microsoft, Amazon, and Google are signing multi-decade power purchase agreements directly with utilities, shifting the investment focus from raw material scarcity to who monetizes the buildout.
For investors, this means choosing the right fund structure is critical. URNM remains tethered to the upstream, concentrating half its assets in just three uranium mining positions. NLR targets the downstream, holding utilities and infrastructure operators that sell electricity to the grid.
NUKZ offers a full-stack approach to capture this transition. Launched on January 23, 2024, the fund holds 53 companies spanning miners, fuel-cycle providers, reactor developers, and utilities. It has returned 46% since its inception, giving investors exposure to both the mining supply chain and the utility operators securing tech contracts without requiring sector-timing decisions.
