Nuclear Sector Outlook: Tim Rotolo on Headwinds, AI Demand & Catalysts

Rotolo designed the VettaFi Nuclear Renaissance Index (NUKZX), which underlies the Range Nuclear Renaissance Index ETF (NUKZ ).

• NUKZ traded ~5% below its 2025 close as of September 30, 2026, as an 80%-plus allocation to operating utilities and industrials buffered steep declines in speculative reactor developers.
• Global electricity demand is projected to grow 3.6% in 2026, driven by broad electrification, industry, air conditioning, and heat pumps, alongside AI data centers.
• Key 12-month indicators include Westinghouse announcing its AP1000 partners and sites, nuclear fuel contracting approaching replacement rates (~150 million lbs), and the Palisades restart.

VettaFi: It’s been a more challenging year for the nuclear space, with flattish performance year-to-date. Can you talk about some of the headwinds this year, and are those transient in nature?

Rotolo: We’d call this a year of digestion rather than deterioration. Nuclear equities came into 2026 after a big run. And much of this year has been the market repricing timelines and paying less for the AI story. NUKZ shows that clearly.

The fund was up 7.36% on NAV at the end of June, then gave back 6.06% in July, when the AI infrastructure sel-off hit power names like Constellation (CEG), Vistra (VST), and GE Vernova (GEV) on worries about data center returns and higher long-term rates. As of September 30, it was trading about 5% below its 2025 close. However, the early-stage reactor developers took the brunt of it. Oklo (OKLO) and NuScale (SMR) are down more than 40% this year through September, as investors come to terms with commercial operations in the 2030s and the dilution needed to get there.

Execution friction added to the pressure. The Palisades restart has taken longer than planned. And in late September, Holtec suspended a roughly $900 million IPO, with its CEO calling the backdrop a “perfect storm” tied to AI sentiment. Those AI-exposed developers are a small slice of NUKZ, with Oklo under 2%. Industrials and utilities make up more than 80% of the portfolio, which is why the fund has held up far better than the most speculative names.

We see most of this as transient, because the fundamentals haven’t moved against the thesis. Uranium ended August at $89.68/lb spot and $96.50/lb long term, based on the UxC and TradeTech month-end prices Cameco (CCJ) publishes. That’s up roughly 10% and 12%, respectively, from the end of 2025. And spot was still near $90 as of September 30.

Cameco also points to more contracting activity as utilities focus on security of supply. Policy keeps advancing too. In March, TerraPower received the NRC’s first construction permit for a commercial advanced reactor in more than 40 years. Four microreactors reached criticality under DOE’s pilot program by July 4. DOE conditionally committed $17.5 billion for AP1000 equipment.

What isn’t transient is that these projects are long and capital-intensive. We expect the gap to persist between companies earning contracted revenue today and those still years from first power.

VettaFi: AI has become a major part of the nuclear investment story. Which other sources of demand do you think deserve more attention from investors?

Rotolo: The bigger story is electrification broadly. The IEA expects global electricity demand to grow 3.6% in 2026 and 3.8% in 2027, driven by industry, air conditioning, EVs, heat pumps, and data centers together. In the U.S., the EIA notes that consumption is rising again after nearly two decades of flat demand, with commercial and industrial load, including manufacturing, leading the way.

Additionally, defense is another underappreciated source. The Army just awarded up to $2.2 billion for microreactors at five bases, targeting September 2028 for the first unit and more than 20 planned across DoD installations. Industrial heat is also coming into focus, as Dow’s (DOW) Seadrift advanced reactor project in Texas received its environmental sign-off in May.

Energy security outside the U.S. may matter even more. Japan is targeting 20% to 22% nuclear by 2030. Korea has reversed its phase-out and is targeting 35% by 2036. India opened its nuclear sector to private investment with a goal of 100 GW by 2047. And Belgium lifted its ban on new construction.

Furthermore, the fuel cycle is its own source of demand. Waivers for Russian enriched uranium imports into the U.S. run out after 2027. And DOE awarded $2.7 billion in January to rebuild domestic enrichment.

VettaFi: With reactors taking years to construct, why would investors want to invest in nuclear now instead of later?

Rotolo: Because much of the value is created before a new reactor ever produces power. Utilities buy fuel years in advance, and contracting has lagged. In 2025, term contracting through mid-December was about 82 million pounds against a replacement rate of roughly 150 million, while Kazatomprom cut its 2026 production target and Cameco lowered McArthur River guidance. That deferred demand still has to be contracted.

The build cycle also pays suppliers early. DOE’s $17.5 billion in conditional loans is specifically for long lead equipment for up to 10 AP1000s, with construction targeted by 2030. Engineering firms, component makers, and fuel suppliers earn revenue well before a reactor produces first power.

The existing fleet is also a near-term story. It includes restarts like Crane, targeted for 2027, along with uprates and life extensions toward 80 years. That’s why NUKZ holds operating utilities and industrials with cash flow today alongside the longer-dated reactor developers. This year’s reset also means the long-term story can be bought at lower valuations than at the start of the year.

VettaFi: What catalysts or milestones should investors look for over the next 12 months to confirm the nuclear investment thesis is heading in the right direction?

Rotolo: On new build, watch whether Westinghouse names its AP1000 partners and sites. It has letters of intent with seven potential partners, and we’d want to see the conditional loans move to financial close. On licensing, watch Dow’s Seadrift project.

For the operating fleet, watch Palisades returning to service and Crane staying on track for 2027. On advanced reactors, the test is whether the DOE pilot reactors move from criticality to real power, such as Aalo’s 10 MWe unit meant to power a data center by 2027, and whether the Army’s microreactor program hits its early milestones.

In the fuel market, we’d look for term contracting to move toward the replacement rate. The Russian waiver deadline should also push utilities to lock in non-Russian enrichment. We’ll be watching for any follow-through on the Section 232 critical minerals action, which impacts uranium. Finally, watch capital markets. Holtec kept its IPO registration and said it may return in three to six months, so a successful deal would signal that investors are once again willing to fund the build.

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