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Uranium miners have emerged among the most shorted stocks on the Australian market, with local investors betting against a boom in US tech companies’ use of nuclear power to fuel energy-hungry AI data centres.
Microsoft, Google and Amazon have signed multimillion-dollar nuclear deals to power their data centres. More recently, Amazon invested $US500 million ($757 million) in developing small modular reactors, and Bill Gates’ nuclear company TerraPower has secured more than $US3 billion in funding for “next-generation nuclear power”.
One of Deep Yellow’s uranium mines in the Northern Territory.Credit:
This surge in nuclear interest has trickled down to the ASX, though investors remain sceptical. Uranium companies Boss Energy, Paladin Energy and Deep Yellow are now among the most shorted stocks on the ASX200, with Boss’ and Paladin’s short interest rising rapidly since June.
Short selling is a risky investment tactic that involves an investor borrowing stocks from brokers and then immediately selling them, before buying the stocks back at a low price when the share price drops, and finally returning the shares while pocketing the difference.
US tech’s interest in nuclear power is driving short sellers to uranium, which a few years ago yielded little investor attention, said nabtrade’s Gemma Dale, a director of self-managed super funds and investor behaviour.
“Short sellers only target things they think are overvalued,” Dale said. “So the simple premise is they think uranium stocks are overvalued and have the potential to fall.”
Dale said that because uranium produces minimal emissions, short-sellers see it as the new renewable energy source that will fuel the expanding use of artificial intelligence (AI).
“Over the last 12 months, [there] has been a kickoff in appetite for AI,” Dale said. “Every significant investor has very quickly drawn the line between the potential for AI, the extraordinary arms race in developing capability, and the amount of power it requires to run a data centre of that magnitude.
“Vermont in the US, as a state, a quarter of their energy now goes just to data centres. How on earth do we generate that amount of energy without completely crippling everything? Nuclear becomes a very obvious solution.”