UBS’ Top Quant Stocks In AI, IT, Healthcare & Other Sectors: Top 33 Stocks In All Sectors

16. NextEra Energy, Inc. (NYSE:NEE)

Number of Hedge Fund Investors In Q2 2024: 73

Sector: Utilities

NextEra Energy, Inc. (NYSE:NEE) is a diversified renewable energy company. With a portfolio capable of generating 33GW of electricity and relying on various sources such as nuclear and solar, the firm is one of the biggest renewable energy providers in America. This makes it unsurprising that NextEra Energy, Inc. (NYSE:NEE)’s shares are up 25.6% year to date as renewable energy stocks have seen considerable investor interest due to their ability to clean power gigawatt scale data centers required by the technology industry for artificial intelligence computing. NextEra Energy, Inc. (NYSE:NEE) also benefits from its ability to generate nuclear power since nuclear power’s ability to meet high baseload is key to running data centers. However, the optimism surrounding the firm’s ability to power artificial intelligence has been dampened by the need to raise capital to finance costly power generation projects. As an example, NextEra Energy, Inc. (NYSE:NEE)’s shares 4% in October when it announced another equity round to finance projects.

NextEra Energy, Inc. (NYSE:NEE)’s management commented on its nuclear capacity expansion plans during the Q3 2024 earnings call. Here is what they said:

“We’ve added another approximately 3 gigawatts of renewables and storage this quarter, our second quarter in a row. As a top operator of all forms of power generation, we often get asked about nuclear and gas. Let me start with nuclear. Nuclear will play a role, but there are some practical limitations. Remember, on a national level, we expect we are going to need to add 900 gigawatts of new generation to the grid by 2040. There are only a few nuclear plants that can be recommissioned in an economic way. We are currently evaluating the recommissioning of our Duane Arnold nuclear plant in Iowa as one example. But even with a 100% success rate on those recommissionings, we would still only meet less than 1% of that demand. Existing merchant nuclear generation is also limited in its ability to meet that demand, given there are only approximately 20 merchant nuclear plants in this country.

That nuclear capacity is also not evenly spread across the U.S. And is not in many places. We know hyperscalers are looking to develop data centers or manufacturing — manufacturers are looking to expand their footprint. For example, there are only two merchant nuclear plants west of the Mississippi. Nuclear plants across the country are already serving existing demand. So even if they are contracted by specific customers, new resources need to be built to meet new demand. And alternatives such as new utility scale nuclear and SMRs are unproven, expensive and again, not expected to be commercially viable at scale until the latter part of the next decade.”