U.S. Signs $80 Billion Nuclear Deal With Westinghouse. Cameco and Brookfield Stocks Surge.

Two Westinghouse AP1000 reactors at the Haiyang Nuclear Power Plant in Haiyang, Shandong province, China. (Wikipedia Commons)

Key Points

• The Department of Commerce partners with Brookfield Asset Management and Cameco to finance and approve at least $80 billion in nuclear reactors.
• The government will receive 20% of Westinghouse cash distributions exceeding $17.5 billion after the $80 billion investment is met.
• Cameco stock and Brookfield shares climb following the announcement of the partnership.

The federal government is putting its might behind nuclear energy, and at least two players in the nuclear space are set to benefit.

Brookfield Asset Management and Cameco announced a partnership with the Commerce Department on Tuesday that will see the government arrange financing and facilitate approvals for at least $80 billion in nuclear reactors powered by Westinghouse Electric technology. Brookfield owns 51% of Westinghouse, and Cameco owns the other 49%.

Much about the deal remains unclear. The $80 billion investment is part of a deal that the U.S. and Japan agreed to this week, according to a Brookfield representative. Japan has agreed to spend $550 billion on U.S. investments, and that could include up to $100 billion worth of investments in Westinghouse large and small scale reactors, according to a joint fact sheet provided by Japan. Whether the U.S. government will also commit funds was not explained.

The investment may finally break a logjam that has kept America from building new nuclear plants for decades. Only three new reactors have been built in the U.S. this century, and the last two went nearly $20 billion over budget. Since then, utilities have balked at building new reactors, because of the risk of overspending and saddling consumers with higher electricity bills.

JP Morgan analyst Mark Strouse estimates that the $80 billion investment could finance as many as eight large-scale nuclear reactors.

Cameco stock soared 20% Tuesday. Brookfield Asset Management, which is a much more diversified company with assets including real estate, climbed 2.9%. Brookfield Renewable Partners , which is in the same family of companies as Brookfield Asset Management and owns part of the Westinghouse stake, jumped 7.6%.

Brookfield Renewable, given its focus on clean energy investments, is a more direct way to play this deal than Brookfield Asset Management. Strouse has an Overweight rating on Brookfield Renewable.

He thinks this deal could generate cash for a very long time. “Each reactor built will require decades of fuel and maintenance services, securing high-margin, recurring revenue streams for Westinghouse and its owners,” he wrote.

As part of the deal, the government will receive 20% of any cash distributions over $17.5 billion made by Westinghouse once the $80 billion investment is reached. If the valuation of a Westinghouse initial public offering is expected to be $30 billion or more by January 2029, the government can also require an initial public offering and receive a warrant to take a 20% equity stake in the company. Such an IPO would represent a windfall for Brookfield and Cameco—the companies bought Westinghouse in 2023 for $4.37 billion.

It wasn’t immediately clear whether the government would finance any of the $80 billion itself. “Many details need to be finalized,” a Cameco spokesperson told Barron’s, adding that the parties expect to negotiate definitive agreements to replace a current binding term sheet.

Barron’s has reached out to the other companies and to the Commerce Department for further comment.

In most other countries, the government takes a direct stake in building nuclear plants, either through state-controlled companies or direct investments. China, for instance, is currently building dozens of reactors with heavy state support. Still, those government investments can be expensive for electricity consumers and taxpayers—the budget of a U.K. nuclear plant called Sizewell C that’s partially funded by the government has nearly doubled since its last estimate, to £38 billion ($50.6 billion).

The deal follows President Donald Trump’s executive orders in May attempting to expedite permitting for reactors and expand uranium production. Westinghouse’s new reactors are expected to generate energy for the U.S. grid, including for artificial-intelligence data centers, the companies said.

“We expect that the new build commitments from the US will bolster broader confidence in the durable growth profile for nuclear power,” said Cameco CEO Tim Gitzel in a statement.

Write to Avi Salzman at avi.salzman@barrons.com and Nate Wolf at nate.wolf@barrons.com