‘Accelerating urgency to secure power’ boosts prospects for natural gas, uranium

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

‘Time to power’

Morgan Stanley analyst Stephen Byrd sees more urgency for power as data centres come on line,

“We have seen many recent signs of accelerating urgency to secure power for data centre growth over the past few months, and we believe 2026 will be even more active given the non-linear improvement in AI. While many of the key power ‘de-bottlenecking’ stocks have performed well in 2025 (for example, BE [Bloom Energy] up 282 per cent year-to-date), we see continued alpha potential for companies that offer innovative, timely, reliable approaches to providing power to AI players … 1. Catalysts we are watching for: (A) Bitcoin-to-DC conversion transactions, (B) Key Takeaways We remain bullish on ‘time to power’ solutions in the U.S., and believe we will continue to see transactions with attractive economics. In this note, we provide more depth around our assessment of the opportunity for Bitcoin miners to repurpose their sites to host HPC data centers. Many Bitcoin mining stocks continue to trade at low EV/watt levels, notwithstanding the likely need for all of this power by the AI sector. Given the 10 times increase in LLM training compute, we recommend preparing for the impacts of a step change in LLM intelligence - we explore this seismic dynamic. Alpha potential: Bitcoin site conversion, nuclear (fuel + power), carbon capture, nat gas power, and reductions to US dependency on Chinese critical materials. Idea 2 large natural gas-fired power deals for data center projects, some of which will be off-grid (at prices that are likely to be surprisingly high, in our view), (C) large front-of-meter DC project announcements at operational nuclear power plants (coupled with new power generation announcements to offset the nuclear power “siphoned away” by these large data centers… federal support to bring the capability to enrich uranium back to the U.S.”

Companies making gas turbines were mentioned later in the report, and I’ll find a format to discuss those opportunities.

Themes to watch

Darrell Cronk, chief investment officer, wealth and investment management for Wells Fargo lists the four most important themes,

“The One Big Beautiful Bill Act, signed into law by President Donald Trump on July 4,2025, allows for sizable increases in the expensing Of equipment, higher deduction limits for research and development and manufacturing infrastructure, and looser interest- deduction limits for companies. Lost in the noise Of the tax-cut extensions is the reality that companies should enjoy a lift to margins and earnings, boosts to the bottom line overlooked as the media focuses on calculating the costs to companies Of absorbing new tariffs…. In our view, we are closer to the beginning than the end of a new capex super-cycle. The additional power and energy needs alone to fuel the Al revolution may be its largest constraint. The demand for reliable and sustainable energy to power the various needs of Al, cybersecurity, cryptocurrency engines, autonomous vehicle growth, reindustrialization of domestic supply chains for manufacturing, and global increases in national defense budgets is beginning to outstrip supply. Even the historically small and defensive Utilities sector is morphing into a growth sector — its current $2.4-trillion market capitalization projected to double in the next 10 year … monetary policy stimulus without an economic recession historically has been very powerful for economic and market growth. We will remain vigilant for any signals that may warn of a change in course, but as of now, the lights remain green … As we sit here today, in the first days of of autumn, equity valuations 100k high by historical standards, but when we dig deeper and view the S&P 500 Index on an equal-weighted basis, we get a different signal. The S&P 500 Equal Weight Index reminds us that while a few mega stocks can create a lot of noise, most large-cap stocks today are reasonably priced. As market breadth expands and strength broadens into other sectors beyond just technology, we believe investors can find good value even as earnings growth strengthens. Another reason for optimism is the piles Of dry powder sitting on the sidelines.”

Trade implications

JP Morgan U.S. equity strategist describes the effects of U.S. trade policy on corporate earnings,

“At the aggregate S&P, it’s hard to see the impact, especially across earnings growth and margins this year. If we look at just 2025 EPS growth, it bottomed around 8.5 per cent a few months ago, and it’s now closer to 10.5 per cent. Net income margins are still expected to grow to over 13 per cent this year and expand next year to 14 per cent, based on consensus bottom-up estimates. Some of this can be explained by the wide gap between average expected U.S. tariff rate and what has been collected. The other is that corporates have had a more robust toolkit for managing the impact … The impact of rate cuts has far outweighed tariffs. We’ve seen a pretty robust rally in small caps over large caps in the past few weeks as markets really price in these rate cuts. And while small caps are broadly underperforming on a cap weighted basis year to date, the Russell 2000 is actually outperforming the S&P 500 on an equal weighted basis by around 3.5 per cent year to date. You would not expect this if there was supposed to be a robust tariff impact at some point in the near future”

Bluesky post of the day

Diversion

“Google begins its battle for the ‘unofficial currency of the internet’” – The Verge