The AI Arms Race Is Cracking Open The Nuclear Fuel Cycle

Authored by Michael Kern via OilPrice.com,

• The abstract “cloud” of artificial intelligence possesses a massive, structural demand for 24/7 “baseload” power that is equivalent to adding Germany’s entire power grid by 2026, a need intermittent renewables cannot meet.

• Decades of underinvestment have resulted in a widening uranium supply deficit, with mined uranium expected to meet less than 75% of future reactor needs and an incentive price of $135/lb required to restart mothballed mines.

• Big Tech hyperscalers are privatizing energy security by locking in clean baseload nuclear power via long-term agreements, effectively making the public grid’s “service” secondary to the “compute-ready” requirements of major platforms.

We are seeing a violent collision between two worlds: the high-speed, iterative world of artificial intelligence and the slow, grinding, capital-intensive world of nuclear physics. 

Data from a survey of over 600 global investors reveals that 63% now view AI electricity demand as a “structural” shift in nuclear planning. This isn’t a temporary spike or a speculative bubble. It is the physical footprint of every Large Language Model (LLM) query finally showing up on the global balance sheet.

For years, the energy narrative was dominated by “efficiency.” We were told that better chips would offset higher usage. That era is over. Generative AI doesn’t just use data; it incinerates energy to create it.

Why the “Efficiency” Narrative Failed

The “Reverse-Polish” reality of AI is that the more efficient we make the chips, the more chips we deploy, and the more complex the models become. This is Jevons Paradox playing out in real-time across the data centers of Northern Virginia and Singapore.

When you look at the energy density required for an AI hyperscale center, you aren’t looking at a traditional office building. You are looking at a facility that pulls as much power as a mid-sized city, but does so with a 99.999% uptime requirement.

Traditional demand models simply didn’t account for a single industry deciding to double its power footprint in less than five years. S&P Global Energy recently highlighted that data center electricity consumption could hit 2,200 terawatt-hours (TWh). 

Intermittent renewables…the darlings of the corporate ESG report…cannot provide the 24/7 “baseload” these machines require…

The hyperscalers have realized that if they want to dominate AI, they need to secure physical atoms before the other guy does.

The $135 Ceiling and the Mining Reality Gap

While the demand side is moving at the speed of software, the supply side is stuck in the mud of 20th-century industrial timelines.

The uranium market is currently a “two-speed” machine. On one hand, you have short-term spot price volatility that makes traders nervous. On the other, you have a long-term supply deficit that is widening like a canyon. 

Data suggests that mined uranium will meet less than 75% of future reactor requirements.

We are living through the consequences of twenty years of underinvestment. After 2011, the world essentially stopped looking for uranium. We lived off the “secondary supply”…old Cold War warheads and utility stockpiles. Those stockpiles are now effectively exhausted.

More than 85% of investors surveyed anticipate uranium prices hitting the $100–$120/lb range by 2026. Some are looking at $135/lb.

I see these numbers, and I don’t see “growth.” I see a desperate incentive price. $135 isn’t a sign of a healthy market… it is the price required to beg miners to reopen mothballed pits and navigate the ten-year permitting hellscape required for a greenfield project.

Mining is a “boots-on-the-ground” reality that doesn’t care about digital timelines.

Who Collects the Equity and Who Pays the Bill?

There is a massive shift happening in the power dynamics of infrastructure. For decades, nuclear power was a public service…state-funded, state-regulated, and built for the citizen.

Now, we are seeing the “Private Platform” era of nuclear energy. When a hyperscaler signs a twenty-year Power Purchase Agreement (PPA) with a nuclear utility, they are effectively “locking in” the best, cleanest baseload power for private profit.

The question we aren’t asking: who pays for the grid upgrades to support this?

The hyperscalers want the green electrons to satisfy their net-zero pledges, but the physical copper and transformers required to move that power often fall on the rate-paying public or the state. We are witnessing the privatization of energy security.

If 63% of investors are right and AI is the new driver of nuclear planning, the “public service” aspect of the grid is about to become a secondary concern to the “compute-ready” requirements of Big Tech.

The equity is being collected by the tech platforms and the uranium miners. The risk is being socialized by the grid.

The Geopolitical Reality of Uranium Supply

We cannot talk about the uranium market without talking about the “Iron Fist” of state policy. The West is currently trying to rebuild a supply chain that it intentionally dismantled.

The U.S. and Europe are aggressively pushing “sustainable finance frameworks” to include nuclear, but they are doing so while facing a massive bottleneck in enrichment and conversion capacity…much of which is still tied to Russian state interests.

China, South Korea, and the UAE aren’t waiting for the market to “find a price.” They are treating nuclear as a matter of national survival. China is currently building more reactors than the rest of the world combined.

They understand something the West is only just realizing: you cannot run a 21st-century economy on 19th-century energy densities.

If the uranium supply remains constrained, we won’t just see higher prices. We will see a geopolitical scramble for “off-take” agreements. The nation that secures the uranium secures the AI lead.

The “vibe” of energy abundance is a lie…We are entering an era of energy rationing by price.

The Technical Friction: Steel vs. Code

The most significant gap in the current market “bull case” is the technical audit of the hardware.

The survey data shows that investors are betting on “restarts” and “greenfield developments” to close the supply gap. But you can’t just pour money into a hole and expect uranium to come out the next day.

Uranium mining is plagued by:

• Water Management Issues: Especially in places like Kazakhstan (the world’s largest producer), where sulfuric acid shortages have already hampered production targets.

• Labor Scarcity: We have a generation of mining engineers who were told nuclear was dead. They didn’t go to school for this.

• The Enrichment Bottleneck: Even if you have the yellowcake, you need to turn it into fuel. The West’s capacity to do this is currently maxed out.

Sprott Asset Management correctly notes that utilities can only defer procurement for so long. Eventually, they have to buy. When they do, they will find a market where the physical steel and the chemical reagents are in shorter supply than the capital.

The “catch-up trade” of 2026 isn’t just about price. It’s about the reality that we forgot how to build big things in the physical world.

The Bill for the Utopia

We are being sold a vision of AI-driven abundance…health breakthroughs, autonomous cities, and limitless productivity.

But to get that utopia, we need to solve a uranium deficit that has been building for twenty years. 

We need to build reactors at a pace not seen since the 1970s. 

And we need to do it while the primary producers are facing technical and geopolitical headwinds.

The $100–$120/lb range is just the beginning. If the supply response doesn’t materialize…and given the 15-year lead times, why would it?  We are looking at a permanent state of high-cost energy for everyone who isn’t a trillion-dollar tech company.

We are finally moving from a world of “clicks” back to a world of “kilowatts”…And the kilowatts are getting very, very expensive.