- AI growth is driving unprecedented demand for energy, with data center consumption expected to double by 2026.
- The closure of U.S. nuclear plants poses a significant challenge to meeting the rising energy needs of AI infrastructure.
- NexGen Energy’s uranium projects, like the Rook I Project, position the company as a key player in addressing future energy demands for AI.
When you ask a question on a platform like ChatGPT, the response seems instant and effortless. However, behind the scenes, a huge and complex infrastructure is at work. Hyperscale data centers are the backbone that makes this AI-powered world possible.
As AI use increases, the challenge for these data centers grows. AI models are becoming more complex, and they now handle not only text but also audio, video, and graphics. Training these models takes vast amounts of data and can take months to complete. With the growing demand for AI, data centers need to find ways to quickly expand their capacity and speed up training, or they could struggle to keep up with future needs.
Just a short time ago, generative AI was an unfamiliar term to most. But by early 2024, McKinsey’s State of AI report showed that 65% of organizations were regularly using it, marking one of the fastest technological growths in history, with no signs of slowing down.
Valued at $196.6 billion today, the AI industry is projected to grow at a rate of 36.6% annually through 2030, according to Grand View Research. Major AI infrastructure projects have already been launched in the past year, and the next step will be a surge of applications utilizing that infrastructure.
“We’re in the early stages of reliable and efficient AI infrastructure,” says Omura, emphasizing the complexity of building the computing power needed to support AI. Unlike traditional systems, AI relies on an interconnected network of GPUs, AI accelerators, CPUs, and more. A single fault in this network can compromise the entire system, causing costly delays in AI training.
Foxconn CEO on the Future of AI
Speaking with CNBC’s Emily Tan, Foxconn CEO and Chairman Young Liu shared his perspective on the ongoing AI boom, stating that it still has a long way to go. Liu noted that advanced language models, like those from OpenAI, are becoming more intelligent with each new iteration, driving the tech industry towards Artificial General Intelligence (AGI)—AI that matches or surpasses human intelligence.
“We’ve heard about AGI, and we talk about different levels of intelligence. If you divide intelligence into four levels, we’re currently at level two. There are still levels three and four ahead,” Liu explained in the interview aired on Tuesday.
OpenAI is at the forefront of AGI development. Its CEO, Sam Altman, has suggested that AGI could arrive in the “reasonably close-ish future.” However, Altman also believes its impact on jobs might be less disruptive than many fear.
What Energy to Supply AI?
As we move into a future shaped by artificial intelligence (AI), a major challenge is emerging: the huge demand for energy that comes with it. The International Energy Agency (IEA) has warned that energy use from AI and cryptocurrency data centers could double by 2026. Just two years ago, these centers consumed about 460 terawatt-hours (TWh) of energy each year. Now, we’re looking at over 1,000 TWh being needed annually.
But there’s a big problem. Our nuclear power plants, which could help supply this massive amount of energy, are shutting down. Since 2012, more than a dozen U.S. plants have closed, mostly because they’re too expensive to run. Single-reactor plants especially struggle to make a profit when electricity prices keep changing. The Three Mile Island incident still casts a shadow over the future of nuclear energy in the U.S., and only 54 nuclear plants remain, with a total of 94 reactors still running.
My Top Pick for October: NexGen Energy
NexGen Energy (NXE), founded in 2011, has quickly emerged as a major force in uranium exploration and development. The company’s flagship project, the Rook I Project, located in the Athabasca Basin of Saskatchewan, is one of the most valuable uranium assets currently being developed globally. This region is renowned for its rich mineral resources, and NexGen’s impressive exploration efforts have captured the attention of both investors and industry analysts.
What sets the Rook I Project apart is its potential to produce nearly 30 million pounds of uranium annually, representing over 50% of the Western world’s uranium supply. Its location in a top-tier mining jurisdiction, combined with its massive production capacity, positions NexGen as a critical player in the future of uranium production worldwide.
NexGen Energy (NXE) has attracted a lot of attention from analysts, with most showing strong confidence in the stock. The average price target for NexGen is $9.57, offering a potential upside of more than 58% from its current price. Analyst estimates range from a low of $7.31 to a high of $15.34, with 13 out of 15 analysts rating it a “Strong Buy,” and 2 rating it a “Buy,” reflecting a high level of optimism for its future growth.
Conclusion
The rise of artificial intelligence (AI) has created unprecedented demand for energy, particularly in data centers. As AI models become more complex, handling everything from text to multimedia, the need for massive computational power is straining existing infrastructure. Hyperscale data centers, the backbone of this AI-driven world, are facing growing challenges to keep pace. With energy consumption expected to double by 2026, the closure of U.S. nuclear plants complicates the energy supply issue. However, companies like NexGen Energy, with their focus on uranium development, may play a crucial role in addressing this demand, positioning themselves as key players in the future of energy and AI.
Marc has been involved in the Stock Market Media Industry for the last +5 years. After obtaining a college degree in engineering in France, he moved to Canada, where he created Money,eh?, a personal finance website. He then contributed to building Guerilla Capital, a Capital Markets company and FirstPhase Capital where he was head of research. At10xAlerts, he writes articles and conducts interviews on many sectors, including breaking news technology, metals & mining markets.
