Artificial intelligence has an enormous appetite for power. The massive expansion of investment in AI infrastructure, data centers in particular, speaks for itself. But it is not just AI. The global rise of electrification and advancing digitalization are also driving up demand for electricity. And that electricity has to come from somewhere. Nuclear energy has moved back into focus, because it is seen as a reliable, baseload power source. Whether that is the right conclusion given the risks and the unresolved question of nuclear waste storage is a different debate. This one is about the consequences for the uranium market.

There are currently 438 active reactors worldwide, and rising electricity demand has prompted many countries to expand or build out nuclear capacity. Right now, 80 reactors are under construction, 123 are firmly planned, and more than 300 are on project lists. China alone has 39 reactors in the construction phase, another 41 in planning, and 144 in the pipeline. Others are following. Major projects are underway in India (26) and Canada (12), and across Europe in Poland (22), the UK (16), Russia (9), Sweden (8), and France (4). Over the long term, this should drive rising demand for uranium, currently the primary fuel for nuclear energy. The World Nuclear Association (WNA) projects that uranium demand could nearly triple by 2040 in its upper scenario, assuming a sustained global buildout of nuclear capacity.

That demand is running into a structural gap. Mine production already falls short of current needs. The shortfall is being covered by inventories and secondary sources, but those buffers are finite. On top of that, output from existing mines is expected to decline sharply after 2030, and new mines take years from exploration to first delivery. The result is a structural deficit that is likely to persist for years, and in my view, that makes it a potential long-term price driver. I want to be positioned for it. Uranium stocks like Cameco are not an option for me right now given their stretched valuations, so I am staying with a direct bet on the commodity itself.

I already hold a small position in the Sprott Physical Uranium Trust and I am building it out. The trust is a closed-end fund incorporated under Canadian law that acquires and holds physical uranium in the form of U3O8. Its units trade on the Toronto Stock Exchange in US dollars (symbol: U.U) and Canadian dollars (symbol: U.UN). It is by far the largest uranium trust and trades with solid liquidity. There are also options available on the Canadian dollar units, which opens up room for strategies like cash-secured puts or writing calls against an existing position. The fund currently holds nearly 37,000 metric tons of uranium with a market value of just under $7 billion. That is roughly 62 percent of global mine production in 2025. That scale is another reason I like it.

I am still wrestling a little with the technical picture. The price broke below its 200-day moving average in early June, and despite a recent attempt, it has not managed to reclaim that level yet. If it does, and the price then clears the interim highs at CA$28.02 and CA$28.84, I will add to my position. Growing global electricity demand, the push to expand nuclear capacity in many countries, and the structural supply deficit are my reasons to buy.

Is the Sprott Physical Uranium Trust a buy? At current prices, I consider the Sprott Physical Uranium Trust (U.UN) the most direct and liquid way to invest in physical uranium without taking on single-stock risk. The fund holds nearly 37,000 metric tons of uranium, equivalent to roughly 62 percent of global mine production in 2025. The structural case is strong: mine supply already falls short of demand, existing mines face declining output after 2030, and the WNA projects uranium demand could nearly triple by 2040. The main risk is timing: the price has not yet reclaimed its 200-day moving average, and the discount to NAV could widen further before it narrows. I am watching two specific price levels before adding further.

Disclaimer: This newsletter is for informational purposes only and does not constitute investment advice. I am not a financial advisor. Always do your own research before making any investment decision.

Disclosure: I may hold direct or indirect positions (including options) in any securities mentioned in this newsletter. My opinions are my own and always honest.