The generative AI revolution has sparked an unprecedented interest in nuclear power among Big Tech giants, as companies race to secure clean energy sources for their power-hungry AI data centers. However, investors and energy experts remain divided on whether nuclear startups can deliver on their promises quickly enough to meet the industry’s explosive growth.
Major Tech Investments in Nuclear Power
In 2024, tech leaders made significant moves into nuclear energy. Microsoft struck a landmark 20-year power-purchase agreement with Constellation Energy in September to restart a dormant nuclear plant at Three Mile Island, the site of America’s most notorious nuclear accident. Amazon invested in X-energy, a developer of small modular reactors (SMRs), while Google partnered with Kairos Power for clean energy through SMR technology. These deals reflect an urgent need: Goldman Sachs projects a 160% surge in data-center power demand by 2030 as companies compete to build the most powerful AI models.
The Skeptics’ Concerns
Despite the enthusiasm, critics argue nuclear won’t solve the immediate energy crisis. Jill McArdle from Beyond Fossil Fuels calls nuclear power “completely off topic” for current data center needs, especially given tech companies’ ambitious emissions targets. Google aims for net-zero emissions by 2030, while Microsoft has committed to being carbon-negative by the same year. The problem? SMRs remain largely untested, with Google’s Kairos Power deal expecting the first reactor online only by 2030, with additional units through 2035.
Venture capitalists share these concerns. Guillaume Sarlat of Axeleo Capital notes that nuclear investments aren’t compatible with typical private-equity fund timelines, questioning what economic conditions will look like when these startups are ready to deliver. Matthew Blain from Voyager Ventures emphasizes that nuclear startups must demonstrate a “believable pathway down the cost curve,” with first-generation fusion plants facing astronomical costs competing against evolving energy storage solutions.
Investment Trends and Future Outlook
VC funding for nuclear startups has been volatile, peaking at $3.57 billion in 2021 before dropping to $1.17 billion in 2023. However, 2024 saw a resurgence with $2.62 billion deployed, including X-energy’s $500 million round and Newcleo’s $151 million raise. A16z named “the resurgence of nuclear” as a key 2025 investment theme, citing regulatory reform, public enthusiasm, and AI’s insatiable energy needs as catalysts for growth.
Key Quotes
What we are talking about, especially now, is the next five years of how are we going to power this massive boom in data centers.
Jill McArdle, a campaigner at Beyond Fossil Fuels, emphasizes the urgency of the energy challenge facing AI companies. Her statement underscores the critical mismatch between immediate power needs and nuclear’s longer development timelines, particularly as tech companies race toward 2030 emissions targets.
The length of the investment is not compatible with private-equity funds — maybe it’s one for evergreen funds. The other problem is, what are the economic conditions going to be when nuclear startups are ready to sell their product?
Guillaume Sarlat, partner at Axeleo Capital, articulates the fundamental financial challenge facing nuclear investments. His concern reflects broader VC skepticism about whether nuclear startups can deliver returns within typical fund lifecycles and whether their products will remain competitive decades from now.
A perfect storm of regulatory reform, public enthusiasm, capital infusions, and insatiable energy needs — particularly from AI data centers — will accelerate orders for new reactors for the first time in decades.
David Ulevitch, general partner at A16z, presents the bullish case for nuclear energy. His optimistic outlook, backed by one of Silicon Valley’s most influential VC firms, signals that despite skepticism, significant capital and institutional support is flowing toward nuclear solutions for AI’s energy demands.
Your first dollars per megawatt of your first fusion plant will be astronomically expensive, and that will be competing on a 20- to 30-year timeframe with the cost of energy and battery storage.
Matthew Blain from Voyager Ventures highlights the economic reality facing nuclear fusion startups. His observation points to the competitive pressure these companies face from rapidly improving renewable energy and storage technologies, which continue to drop in cost while nuclear remains expensive.
Our Take
This nuclear-AI nexus reveals a fascinating paradox at the heart of technological progress. Big Tech’s nuclear pivot demonstrates how AI’s success has created infrastructure demands that existing renewable solutions may struggle to meet at scale. However, the timeline mismatch—nuclear reactors coming online around 2030-2035 while AI data centers are being built today—suggests this may be more about long-term strategic positioning than immediate solutions.
The real story here is about risk allocation. Tech giants like Microsoft, Google, and Amazon can afford to make decade-long bets on unproven SMR technology, essentially subsidizing nuclear startup development while they continue using traditional power sources in the interim. For VCs and smaller players, the calculus is far more challenging. The volatility in nuclear startup funding—from $3.57 billion in 2021 to $1.17 billion in 2023—reflects this uncertainty. What’s emerging is a two-tier system: patient capital from tech giants and specialized funds betting on nuclear’s long-term potential, while mainstream VCs remain cautious. The ultimate question isn’t whether nuclear can power AI, but whether it can do so before alternative solutions or efficiency gains make the massive infrastructure investments obsolete.
Why This Matters
This story represents a critical inflection point for both the AI and energy industries. As artificial intelligence models grow exponentially more complex and power-hungry, the infrastructure supporting them becomes a potential bottleneck for innovation. The 160% projected increase in data-center power demand by 2030 isn’t just a technical challenge—it’s an existential question for AI’s continued advancement.
The nuclear debate highlights a fundamental tension in tech: the gap between ambitious AI development timelines and the reality of energy infrastructure deployment. With major tech companies committing to carbon-negative or net-zero targets by 2030, yet nuclear solutions potentially not coming online until that same deadline or later, the industry faces a critical decision point about whether to pursue nuclear or pivot to more immediately available renewable solutions.
For the broader economy, this matters because AI is increasingly positioned as a transformative technology across sectors. If energy constraints limit AI development, it could slow innovation in healthcare, finance, manufacturing, and countless other industries. Conversely, if nuclear startups succeed, they could unlock a new era of clean, abundant energy that extends far beyond data centers, potentially reshaping global energy markets and climate change mitigation strategies.
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Source: https://www.businessinsider.com/big-tech-nuclear-startups-ai-data-center-vc-boom-2024-12