It’s official. Google (Nasdaq: GOOGL) is going nuclear.
This Monday, the tech giant rocked the market when it announced plans to purchase nuclear energy from an Alameda, California-based startup called Kairos Power.
Before we get carried away with the possibilities, it’s important to drill down on the specifics of this deal first.
Because the Small Modular Reactors (SMRs) that will be providing this power don’t technically exist just yet…
Kairos is still working on a demonstration reactor in Tennessee that will work as an experimental proof of concept. That test reactor won’t be done until 2027. And the first of Google’s 6-7 contracted SMRs won’t come online until 2030, with the rest entering service by 2035.
We can’t put a specific dollar amount on this deal either, since the financial terms of the deal haven’t yet been disclosed.
So it’s easy to play the skeptic here, assuming the news is little more than a stunt for the press on behalf of Google and Kairos energy.
At the same time — this kind of deal is entirely unprecedented for Google.
And it signals a critical turning point not just for the search giant, but for big tech at large…
Big Tech’s Big Bottleneck
Over the last two years, big tech companies have been locked in an artificial intelligence (AI) arms race, with each company scrambling to bring the first game-changing AI products to market.
AI is already shaping up to be the greatest trend in tech history, with estimates showing it will add up to $150 trillion to the global economy.
AI will also be the most difficult and resource-intensive new trend in tech history.
To sustain our current pace of AI research, computing power needs to double every 100 days.
To reach its full potential, AI will ultimately require 10,000x the computing power we have today.
Obviously, these are all just projections.
We’re still only in the early innings of the AI mega trend, but the “big picture” is already clear. AI will require massive amounts of computing bandwidth, and in turn the electricity needed to keep all those machines running.
That’s why Google is making deals to ensure access to abundant nuclear energy in the 2030s.
The company already runs 15 massive data centers, and they’ve got four more in development.
When AI research starts getting into full swing, the company will need an absolutely massive amount of power just to keep the lights on.
Both Amazon and Microsoft have come to the same realization as well, with each announcing a series of new deals that will plug their own data centers into a steady flow of nuclear power.
Fast-Tracking Nuclear Ambitions with SMRs
Two of these three new mega-deals involve those small modular reactors (SMRs) I mentioned above.
These reactors only output about a third of the power of a traditional reactor. But since they’re modular, they can be shipped off to remote locations and transported with ease.
In contrast, Microsoft’s deal with Constellation Energy will involve restarting an existing nuclear power plant at Three Mile Island (yes, that Three Mile Island). Following the meltdown at Reactor Unit 1, the facility’s Reactor Unit 2 kept running for another 30 years, until it was finally shut down in 2019.
Since the plant was originally commissioned in 1974, it will need to be updated and overhauled to meet with current safety standards.
Constellation estimates the makeover could take four years, with Reactor Unit 2 potentially coming back online in 2028. The facility would also need to be re-licensed, which would keep it running through 2054.
So you can see the advantages of going with SMRs instead.
Construction and setup would be far faster with portable SMR units. And you don’t have to spend years building a massive nuclear facility in anyone’s backyard, either.
Having a fleet of SMRs could vastly simplify the power needs of a trillion-dollar tech company.
And this new reactor type is also an emerging tech field all on its own. So far, only China and Russia have limited working SMRs, but a number of different prototypes are in development across the world.
If Google, Amazon or any other tech giant can partner with the right company, they could quickly emerge as a leader in this new nuclear field — in addition to meeting their own power needs.
This will be a major developing tech story throughout 2025.
To good profits,
Chief Investment Strategist,
Money & Markets
