Your Backdoor Way to Play the AI Boom
Want to know the best backdoor way to make lot of money through artificial intelligence?
Uranium stocks.
We’re in the middle of an explosive move in the uranium sector. Below, we look at Uranium Royalty Corp. (UROY). It’s a stock held in Luke Lango’s trading service AI Trader.
As you can see, it’s up 43% since Monday of last week.
This is part of a broader 93% gain that began last April.
But as just noted, this move isn’t limited to UROY. The entire uranium sector has been marching higher for months. The easiest way to see this is through the Global X Uranium ETF, URA. It’s up 73% since last March.
Behind this ascent is a simple reality: Our world needs vastly greater quantities of cheap, abundant, clean energy. But while this was always true due to global population growth, there’s a new urgency behind the need…
Artificial intelligence.
AI and its voracious demand for energy
Artificial intelligence is going to transform how we live and work…if we can power it.
Bleeding-edge AI technologies don’t run on your everyday electrical wall socket or, say, AA batteries. They require vastly greater volumes of energy – and that’s a challenge for our world today as we seek environmentally-friendly yet cheap energy sources.
Here’s The Wall Street Journal:
Every company betting that artificial intelligence will transform how we work and live has a big—and growing—problem: AI is inherently ravenous for electricity.
Some experts project that global electricity consumption for AI systems could soon require adding the equivalent of a small country’s worth of power generation to our planet.
That demand comes as the world is trying to electrify as much as possible and decarbonize how that power is generated in the face of climate change.
Alex de Vries, a researcher at the School of Business and Economics at the Vrije Universiteit Amsterdam, researched the amount of electricity that AI could require to power global data centers. His findings suggest a demand explosion of 50%…by just 2027.
Our world is unable to meet this need today, especially as governments around the globe are looking to move away from fossil fuels. However, solar, hydro, and wind energy not able to do all the heavy lifting of the world’s energy needs.
So, what’s the answer?
Well, many of the smartest people most familiar with this challenge are pointing toward the same thing…
Nuclear energy.
And as you’re likely well-aware, there’s no way to have nuclear fission energy without uranium. And that dovetails us into what’s happening right now in Davos…
Speaking at the World Economic Forum in Davos, Switzerland yesterday, OpenAI’s CEO Sam Altman said an energy breakthrough is a necessity for the future of artificial intelligence
From Reuters:
Altman said the silver lining is that more climate-friendly sources of energy, particularly nuclear fusion or cheaper solar power and storage, are the way forward for AI.
“There’s no way to get there without a breakthrough,” he said. “It motivates us to go invest more in fusion.”
In 2021, Altman personally provided $375 million to private U.S. nuclear fusion company Helion Energy, which since has signed a deal to provide energy to Microsoft in future years. Microsoft is OpenAI’s biggest financial backer and provides it computing resources for AI.
Altman said he wished the world would embrace nuclear fission as an energy source as well.
Now, you’ll notice that Altman just referenced both nuclear fusion and fission.
To make sure we’re all on the same page about the differences in these energy sources, here’s Luke with a basic primer:
To date, everything achieved with nuclear power has revolved around nuclear fission. That involves splitting apart atoms to capture and use the energy produced from the division.
While nuclear fission revolves around splitting atoms, nuclear fusion is all about combining them.
Specifically, nuclear fusion is a process in which atomic nuclei combine to form a heavier nucleus, releasing a large amount of energy in the process. This energy is released in the form of light and heat.
Importantly, nuclear fusion does not depend on any chain reactions and does not produce any radioactive waste. It is entirely stable without any negative byproducts.
Luke explains that while fusion is the key to creating limitless energy, no one has figured out how to make a viable nuclear fusion reactor – though in December of 2022, we had a huge breakthrough.
In short, physicists at Lawrence Livermore National Laboratory in California announced that they had created the world’s first nuclear fusion project with a positive net energy gain.
As the name suggests, “net energy” refers to the difference between the energy consumed by an energy production process and the energy produced by it. Clearly, an energy source must generate a positive net energy gain. But historically, attempts at nuclear fusion were net negative…until 2022 when the Livermore scientists had their breakthrough.
Back to Luke:
That’s a huge deal.
The one obstacle that has kept nuclear fusion from becoming a viable reality has just been removed. The Livermore project has set in motion a multi-decade trend of nuclear fusion technology reshaping the world’s energy system.
We now have clear visibility to the world being powered by nothing more than a few nuclear fusion reactors by 2040.
While nuclear fusion is the goal, we’re still years away from it powering our world – and that puts nuclear fission (and uranium) in the spotlight
What evidence to we have that there’s growing demand for nuclear fission and uranium?
Well, let’s rewind to the 2023 United Nations Climate Change Conference or “Conference of the Parties” (known as COP28) last December.
From Canary Media (a clean energy website):
More than 20 countries including the U.S., France, Japan and the United Kingdom have pledged to triple global nuclear energy generation by 2050 at the launch of COP28 in Dubai in the United Arab Emirates, the world’s annual climate summit.
John Kerry, former U.S. secretary of state and President Biden’s climate envoy, made the case for nuclear energy during the event’s launch ceremonies, saying that the science has proven “you can’t get to net-zero 2050 without some nuclear.”
Circling back to UROY from the top of today’s Digest, is it still a buy?
From a trading perspective, though you can never predict where a bullish move will top out, the technical signals that Luke watches are suggesting the gains in UROY are overextended, which means “short-term caution.”
Below, we look at UROY’s price chart along with its Relative Strength Index (RSI) and its MACD indicator.
For newer Digest readers, the RSI is a momentum indicator that measures the extent to which an asset is overbought or oversold. A reading over 70 suggests an asset is “overbought” (and likely poised to pull back as traders take profits) while a reading below 30 means it’s “oversold” (and poised for gains as bargain hunters step in and buy).
Meanwhile MACD stands for “moving average convergence/divergence.” It reflects changes in a price trend’s strength, direction, momentum, and duration. Traders use this tool by analyzing the location of the MACD line relative to its signal line.
As you can see below, UROY’s RSI is 76, which is very overbought. And its MACD (in black) is blown out to the upside, towering above its signal line (in red).
Together, this suggests that this most recent explosive move in UROY is far more likely to be near its short-term finish than to have plenty of juice left.
Therefore, from a trading perspective, be cautious about leaping into UROY today. But I would put it on your watch list.
If/when traders like Luke and his AI Trader subscribers take their profits, we’ll likely see UROY give back some of these gains, leading to more attractive entry prices – possibly even with an oversold technical set-up. That’s when I’d jump into UROY for a trade.
But from a long-term perspective, the macro set-up for UROY and other leading uranium producers is about as compelling as it gets.
Our world needs clean energy – and far more so today as we stand on the cusp of a world driven by AI.
On that note, just last Thursday, Luke recommended three new uranium plays to his Early Stage Investor subscribers.
As I write Wednesday morning, the first recommendation is flat, the second is up 12.4%, and the third has jumped 13.3%. Congrats to all the Early Stage Investor subscribers for this excellent entry timing.
Coming full circle, we’ll end today’s Digest the same way we began…
Want to know the best backdoor way to make lot of money through artificial intelligence?
Uranium stocks.
Have a good evening,
Jeff Remsburg
