When you hear the name Amazon.com (NASDAQ: AMZN), a couple of things probably pop to mind. E-commerce, first and most obviously -- after all, Amazon is the world's biggest e-commerce company -- and then cloud computing. At $90 billion in annual revenue, Amazon Web Services (AWS) is bigger than Microsoft's (NASDAQ: MSFT) Azure, and far larger than Google Cloud.
One thing you almost certainly do not associate with Amazon.com, though, is nuclear power production. But maybe you should.
Amazon goes nuclear
Cloud computing and nuclear power, after all, seem destined to go hand in hand. Newspaper headlines these past few months have announced news of Microsoft's tie-up with Constellation Energy (NASDAQ: CEG), for example, to restart Three Mile Island and provide nuclear power to Microsoft's server farms. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has similarly teamed up with privately held Kairos Power to build nuclear power plants for its data centers.
This trend didn't go unnoticed at Amazon.
In November, PBS News reported that Amazon has become the "biggest investor" in an Energy Northwest project to build four small modular nuclear reactors (SMRs) in Hanford, Wash., outputting 320 megawatts of power (so 80 MW each) for local use. Over time, the project could grow to 12 SMRs putting out nearly as much as one full-scale, traditional-size nuclear reactor -- 960 MW.
To help get the ball rolling, Amazon will ante up $334 million to fund a "multiyear feasibility study" before work begins.
Why Amazon is interested in nuclear power
Amazon's investment will give it "first access" to any power produced at the site, which it can use to run its Pacific Northwest data centers. Assured access to all this power is therefore one reason Amazon is interested in nuclear power. In theory, Amazon could even use all the power produced at the site. One large AWS data center located in Pennsylvania, for example, has been reliably estimated to consume 960 MW per year -- coincidentally the same estimated maximum output of the Washington site.
A second, long-term reason is that a successful SMR project in Washington State could turn Amazon into a major player in nuclear power generation nationally.
How? Well, it turns out that the Washington project, although owned and operated by Energy Northwest, would use SMRs manufactured by a private company called X-energy. In October, Amazon (alongside four other investors) invested $500 million in X-energy, aiming to eventually develop five gigawatts of SMRs across the U.S. by 2039.
The Energy Northwest project is just the first part of this effort, and represents just 6.4% of the goal.
Amazon's pet nuclear company
It's not 100% clear how much of the $500 million consortium-investment in X-energy comes from Amazon itself. However, in a press release, X-energy did call Amazon its "anchor" investor, suggesting that its share is the biggest in the funding round.
Depending on precisely how much cash Amazon anted up, its total investment in Energy Northwest and X-energy combined could approach $1 billion. Amazon's ownership stake in X-energy in particular might be 50% or more. We know this because, prior to the October investment, in 2023, X-energy's private market value was estimated at $1.05 billion. We also know that this market value had been falling, because in late 2022, the company had been valued at $2 billion.
While it's often hard to get a firm handle on valuations of privately owned companies, the downward trajectory in X-energy's value does suggest that Amazon's $500 million investment could make it majority owner of an up-and-coming nuclear stock. At the very least, Amazon is now almost certainly one of X-energy's largest shareholders.
What this means for Amazon stock
So how excited should this make Amazon investors? That's hard to say.
On the one hand, at $2.4 trillion in market capitalization and with $620 billion in annual revenue (according to data from S&P Global Market Intelligence), Amazon is quite a large company already. Whether X-energy ends up building 5 gigawatts of nuclear power plants or only 320 megawatts, either way, it's probably not going to move the needle much on a company as big as Amazon.
Plus, it will be years before the Washington site is up and running (assuming it's ever completed at all). It will be at least 15 years before Amazon and X-energy could even hypothetically complete construction on 5 GW worth of SMR nuclear power plants. So all of this hypothesizing is very far out in the future.
Still, probably the most significant takeaway for investors is this: X-energy is a tiny company with a very big backer. That should make investors in rival SMR companies such as Nano Nuclear Energy (NASDAQ: NNE), Oklo (NYSE: OKLO), and NuScale Power (NYSE: SMR) nervous. Even if its nuclear plans don't move the needle much for Amazon itself, the fact that cash-rich Amazon is backing X-energy could take the wind out of the sails of many of X-energy's rivals.
That's one more reason for investors in these other nuclear stocks to be cautious.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool recommends Constellation Energy and NuScale Power and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
