Panic at AIXTRON and NEL! Is Kraken Energy an AI beneficiary?

Kraken Energy: Will uranium become an "AI beneficiary"?

More and more companies are investing in artificial intelligence (AI). This brings with it unforeseen challenges. Because the data centers required for the AI boom are gigantic and where the electricity needed for them is to come from is hardly clear. Elon Musk expects that electromobility and the AI boom will cause energy consumption in the US to triple by 2045. Experts from the Boston Consulting Group expect energy consumption by data centers in the United States alone to explode from 126 terawatt hours in 2022 to 390 terawatt hours in 2030.

While Germany is known to be converting its energy supply to renewable sources, nuclear power will play an important role in the energy mix of many other countries in the future. China, for example, has announced that 42 new nuclear reactors are to go into operation over the next 15 years. Worldwide, 8 nuclear reactors are currently under construction. This makes it clear that the demand for uranium will remain high in the coming years. The uranium price has consolidated in recent weeks, and with it, numerous companies in the sector. One of these is Kraken Energy. This offers a buying opportunity.

The Company focuses on historical properties in the US. As a result, deposits have already been proven on the sites in the past. In addition, there is no country risk, as is the case with explorers in Africa, for example. Specifically, Kraken Energy owns four high-grade uranium projects in the US states of Nevada and Utah. Three projects have already produced uranium in the past, and with new technology and higher prices, it is now worth revitalizing them. After receiving the green light for its drill program at the Hearts Point property in Utah at the turn of the year,* Kraken CEO Matthew Schwab commented: "We have great confidence in the property after drilling only two holes over a 5 km length and intersecting elevated radioactivity in both. We look forward to continuing our work in Utah as we move forward with advanced exploration of our portfolio of exciting properties*."

Further positive news should soon give the share a boost.

AIXTRON: Price target shaved

The AIXTRON share is currently looking for a bottom. After the surprisingly weak forecast for the current year, every attempt at recovery is being sold off. This was also the case yesterday when the share temporarily lost more than 5% and slipped well below EUR 22. The reason was a negative analyst comment. The experts at Exane BNP Paribas believe that shipments of Silicon Carbide (SiC) production systems from AIXTRON peaked last year. Even after the transition year 2024, they expect the Company will be unable to maintain its market share. One of the reasons for this is that chip manufacturers are increasingly switching to wafers with a diameter of 200 mm rather than 150 mm. The analysts have, therefore, more than halved their price target for the AIXTRON share to EUR 21.91 and downgraded the stock from "Outperform" to "Underperform". AIXTRON itself had reacted to the rumors of market share losses a few weeks ago and emphasized that demand was stable. Jefferies then confirmed its "Buy" recommendation with a price target of EUR 50.

Nel: Where are the orders?

Yesterday, a negative analyst comment also caused a sell-off in the Nel share. As a result, the hydrogen specialist's share lost more than 15% at one point and traded below EUR 0.50 again. This also marked the brutal end to a countermovement.

Pareto Securities has downgraded the Nel share from "Hold" to "Sell". The price target was shaved from NOK 5 to NOK 4. Although the analysts expect Nel to report record figures in the first quarter of 2024, there will be massive challenges after that: New orders are needed, the loss remains high, and therefore, more capital is needed. Nel needs to acquire orders totaling around NOK 7 billion. However, there is currently no sign of this. Thus, the loss in the operating business will be significant for the time being.

The fact that uranium will be in demand in the coming years is nothing new. However, if uranium now also becomes an "AI beneficiary", the consolidation in the price and the shares of the sector should soon be over. Kraken Energy is an interesting explorer in this regard. AIXTRON and Nel have simply run out of steam at the moment, although a rebound is possible at any time. In the case of the Norwegians, in addition to operational issues, there is also negative sentiment within the industry.