Amazon.com Inc. (NASDAQ:AMZN) has been in the spotlight today after its cloud computing division, Amazon Web Services (AWS), announced plans to invest more than $500 million in nuclear energy.
As it expands its footprint in generative AI, the need for energy will continue to increase.
AWS signed an agreement with Dominion Energy Inc. (NYSE: D), on Wednesday, to potentially develop a Small Modular Reactor (SMR) close to the nuclear power plant of North Anna.
The announcement is in line AWS’s commitment to environmentally friendly operations, as small modular reactors are usually free of carbon dioxide emissions.
Amazon stock is up 30% since the beginning of 2024.
Amazon sees the nuclear industry as a huge opportunity
Amazon isn’t the only company that has turned to nuclear energy to meet its ever-increasing energy needs for its data centers.
Google and Microsoft also made similar announcements earlier this month.
Matthew Garman, the chief executive officer of Amazon Web Services, called nuclear power “a great opportunity”. He said that solar and wind energy projects would not be able meet the AI-related demand for electricity in the future.
“The technology is progressing to a point where SMRs will be a new form of technology that will be safe and easy to manufacture, in a smaller form,” he said.
The news comes a week before AMZN’s scheduled financial results for its third quarter.
It is expected to earn $1.14 per share, compared to 85 cents a share last year.
Is AI enough to justify buying Amazon stock?
Dominion Energy predicts that artificial intelligence will fuel a massive increase of 85% in power demand within the next 15 years.
It is convinced that SMRs will be key to making Virginia, its home state, a “leading nuclear innovator hub”.
Amazon also signed an agreement today with Energy Northwest for the development, licensing, and construction of four new small modular reactors in Washington.
Jefferies has even called artificial intelligence the best AI story.
Brent Thill, an analyst at the investment firm, said in a recent CNBC interview:
If you have 50% of the cloud market, you will have a huge AI advantage.
You’ve seen the CAPEX and you’ve seen their spending, but this investment will pay off.
Brent Thill rates Amazon stock as “overweight”. He sees a potential upside of more than 20% from here.
Our market analyst Ritesh A. also has a bullish outlook on AMZN, but recommends that you wait until it closes above $190 for at least two consecutive days before investing.
The shares of the multinational based in Seattle are not attractive to income investors because they do not pay a dividend.
This post Amazon invests over $500 million in Nuclear Power–here’s Why may be modified as new information becomes available.
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