Data centers, AI, and nuclear baseload: will small modular reactors power the digital economy?

The explosive growth of artificial intelligence is forcing a rethinking of the U.S. energy landscape. As data centers proliferate to support the computational demands of generative AI, cloud services, and high-performance computing, electricity demand is surging at a pace unseen in decades. While renewable energy and storage technologies continue to expand, utilities and policymakers are increasingly eyeing nuclear power — particularly small modular reactors (SMRs) — as a scalable, low-carbon solution capable of supplying the baseload power that data-driven economies now require.

Behind the scenes, the U.S. Department of Energy’s Argonne National Laboratory is playing a central role in this transition. By providing technical modeling, fuel performance simulations, and validation platforms, Argonne is helping private developers bring SMRs and microreactors closer to commercialization. These systems, unlike conventional large-scale reactors, can be sited flexibly near industrial hubs and data campuses, offering a new template for powering the digital infrastructure that underpins AI growth.

How small modular reactors could become the backbone of U.S. data center and AI energy demand

Data centers are emerging as the energy giants of the digital age. Research from grid operators suggests that electricity demand from hyperscale cloud campuses could double by 2030, with artificial intelligence training workloads consuming more megawatts per facility than traditional IT operations ever did. Microsoft, Google, and Amazon are already exploring nuclear-backed options for long-term power purchase agreements, as existing renewable contracts alone may not meet future requirements.

SMRs fit this demand profile by providing stable, high-capacity output in a compact footprint. Developers like X-energy and Westinghouse are actively designing reactor systems that could operate adjacent to or directly within industrial zones, ensuring that data campuses can secure dedicated baseload supply without overburdening regional grids. TRISO fuel, the robust pebble-based fuel being tested in Argonne’s simulations, enhances safety margins, making the case for SMRs stronger in proximity to urban or industrial users.

The appeal extends beyond reliability. Nuclear power offers 24/7 generation with zero direct carbon emissions, a factor that resonates with large technology firms facing shareholder and regulatory scrutiny over sustainability pledges. If data centers can secure carbon-free nuclear baseload, it strengthens their environmental, social, and governance (ESG) positioning while hedging against volatile natural gas markets.

Industry analysts note that the Defense Department and Department of Energy are also monitoring SMR deployments for their potential to supply military bases, remote operations, and hydrogen production hubs. This dual civilian-defense interest accelerates licensing timelines, which could in turn bring SMR deployments online sooner than many other large-scale infrastructure projects.

Investor snapshot: Constellation Energy and Dominion Energy

Constellation Energy (NASDAQ: CEG) has been one of the stronger performers in the U.S. utilities sector during 2025, with its share price up nearly 18% year-to-date. Institutional flows have been positive, with pension and sovereign wealth funds adding exposure as the company positions itself as a frontrunner in advanced nuclear integration. Analysts remain broadly bullish, with a consensus “buy” rating driven by expectations that Constellation will secure nuclear-backed power purchase agreements with AI-heavy tech firms.

Dominion Energy (NYSE: D), by contrast, has delivered a flatter performance, gaining just under 4% this year as investors weigh high capital expenditure requirements against its reliable dividend yield. The stock maintains a “hold” consensus, with analysts citing stable cash flow but limited near-term catalysts. Hedge funds remain selective, often trading Dominion tactically for yield rather than growth.

For investors, the divergence highlights a broader trend: utilities with advanced nuclear partnerships are commanding premium valuations, while those slower to adapt remain valued primarily for income stability.

The investor community has begun to take notice. Exchange-traded funds such as the Global X Uranium ETF (NYSEARCA: URA) have seen consistent inflows in 2025, with institutional investors highlighting nuclear as a hedge against both energy market volatility and AI-driven demand shocks. For utilities like Constellation Energy and Dominion Energy, aligning with advanced nuclear programs offers not just reputational benefits but also future revenue diversification. Analysts point out that as AI’s energy footprint expands, companies positioned to offer nuclear-backed power purchase agreements may see a structural shift in earnings quality.

Yet challenges remain. Licensing SMRs through the Nuclear Regulatory Commission requires years of safety demonstrations, and supply chains for advanced fuels like TRISO and HALEU are still maturing. Costs also remain a sticking point, with initial SMR projects expected to carry premium capital expenditures until scaled manufacturing takes hold. Argonne’s role, however, reduces uncertainty by validating reactor models in advance, potentially shortening development cycles and lowering financing costs.

The momentum suggests that by the early 2030s, select U.S. data centers could indeed be running on nuclear-backed power. In a landscape where AI’s electricity appetite is only climbing, small modular reactors may evolve from experimental designs into the digital economy’s hidden workhorses. For investors, that means today’s technical collaborations between Argonne and private developers may foreshadow tomorrow’s blue-chip opportunities in both utilities and technology-linked energy partnerships.