Nuclear energy has re-emerged at the center of the U.S. power debate, fueled by a wave of optimism that it can meet the surging electricity needs created by artificial intelligence data centers. Yet inside JPMorgan’s investment bank, executives are warning that the market may be overestimating the industry’s ability to scale at the speed required. While financial markets are cheering a so-called “nuclear renaissance,” analysts are questioning whether the sector is equipped to deliver in time.

Investor Euphoria Meets Structural Constraints

The surge of investor interest in nuclear has been dramatic. Shares of Oklo Inc., a nuclear energy startup, have skyrocketed more than 500% this year, buoyed by the groundbreaking of its first commercial reactor in Idaho. Broader sector benchmarks such as the MVIS Global Uranium & Nuclear Energy Index are up more than 70% in 2024, vastly outpacing the S&P 500’s 14% gain.

Yet JPMorgan executives suggest the market enthusiasm may not fully align with reality. While demand for power is rising in real time, nuclear supply chains remain bound by slow permitting, high costs, and a limited labor pool. The bank’s corporate advisory leadership warns that the optimism driving these rallies risks “over-indexing” on a sector that still faces decades-old bottlenecks.

Political Support vs. Practical Realities

The nuclear revival has been supported at the highest levels of U.S. government. The Trump administration has advanced policies to quadruple nuclear capacity and strengthen U.S. competitiveness against Russia and China. For policymakers, nuclear power is among the few scalable, low-carbon options available to reduce reliance on fossil fuels.

Still, the timeline remains daunting. Conventional nuclear plants take at least a decade to construct and often encounter delays and cost overruns. Only three large-scale reactors have been completed in the U.S. this century, underscoring how entrenched the obstacles are.

Smaller modular reactors (SMRs), heralded as a faster, cheaper alternative, are attracting heavy investment but remain years from being cost-competitive. Fusion technology, often described as the ultimate solution, is still considered at least a decade away.

AI Energy Demand Outpaces Nuclear Supply

The rapid expansion of artificial intelligence infrastructure adds another layer of complexity. AI data centers are driving unprecedented energy requirements, with estimates suggesting a $2 trillion capital expenditure wave in the coming decade. Industry strategists warn that nuclear energy cannot meet near-term demand, with faster-deploying assets such as natural gas, solar, wind, and storage likely to dominate the buildout.

Financial institutions also highlight the issue of affordability. Rising power prices in multiple regions are already testing consumer and political tolerance. The question of who ultimately bears the cost of long-term nuclear expansion—taxpayers, utilities, or private capital—remains unresolved.

Outlook: Balancing Optimism with Realism

The enthusiasm for nuclear power reflects its undeniable potential as a cornerstone of future low-carbon energy supply. Yet investors and policymakers may need to temper expectations with recognition of the sector’s slow deployment and structural constraints. In the near term, energy reliability is likely to hinge on a broader mix of gas with carbon capture, renewables, and storage. For markets, the challenge will be distinguishing between long-term nuclear potential and short-term energy realities—a balance that could define both investment performance and energy security over the next decade.