Venture capital is flowing into nuclear energy startups at an unprecedented pace, with funding surging for both fusion and fission firms as the technology becomes a critical component of sustainable energy security amid the artificial intelligence boom.

According to reporting by Axios, global investment in fission and fusion has surpassed USD $4.5 billion across 81 companies in 2026 so far. At this trajectory, total funding for the year is on pace to shatter 2025's record of $6.2 billion across 93 companies.

Data center hyperscalers are driving energy demand projections to levels previously considered unattainable, necessitating an all-of-the-above approach to energy development in which nuclear energy is expected to play a prominent role as a round-the-clock, zero-emissions electricity source. Nuclear power currently supplies roughly 19% of U.S. electricity, and expanding that share through new construction has proven difficult for decades. In the United States, both public and private sectors are heavily bullish on the technology, and the majority of this year's funding surge is being directed toward U.S. companies.

Big Tech has shown particular interest in expanding nuclear energy deployment to meet its rapidly growing energy needs. Some of the sector's most prominent figures, including Bill Gates and OpenAI's Sam Altman, are major investors in and advocates for nuclear fusion as a solution to AI's escalating energy demands. "There's no way to get there without a breakthrough," Altman said at the 2024 World Economic Forum in Davos, Switzerland. "It motivates us to go invest more in fusion." Beyond individual investments, major tech companies have already begun securing nuclear power through corporate procurement agreements. Microsoft has agreed to purchase power from Constellation Energy's restarted Three Mile Island Unit 1, Amazon has invested in X-energy's SMR development and signed nuclear energy agreements, and Google has announced a power purchase deal with Kairos Power for small modular reactors.

The Trump administration is similarly a strong proponent of nuclear energy expansion, with a focus on next-generation technologies as part of a broader effort to "reestablish the United States as the global leader in nuclear energy" and "produce lasting American dominance in the global nuclear energy market." Executive Order 14301, signed by Trump in May 2025, mobilizes significant resources from the U.S. Department of Energy's Reactor Pilot Program to accelerate the testing and commercialization of advanced nuclear technologies and bring them to scale.

These advanced technologies include nuclear fusion as well as small modular reactors (SMRs), which show significant promise for overcoming the hurdles that have contributed to nuclear energy's decline in the United States. Traditional nuclear power plants are enormously costly and face lengthy timelines and extensive regulatory hurdles. The country's newest traditional nuclear facility, Georgia's Plant Vogtle, came online years behind schedule and billions of dollars over budget. The expectation is that modular and alternative technologies can avoid similar problems, as they can be manufactured offsite at relatively low cost.

SMRs, however, remain an emerging technology. While one SMR design has received official approval for development in the United States and numerous other firms are seeking approval, no SMRs have yet come online in the country. "The U.S. Nuclear Regulatory Commission took about six years to approve the first advanced small reactor design, from fission developer NuScale," Axios reports. "President Trump has sought to accelerate the process, aiming for 18 months. But that still could give first movers a major advantage in locking down contracts with data centers and electric utilities." That first NRC-certified design, from NuScale, suffered a significant commercial setback when its flagship Carbon Free Power Project with the Utah Associated Municipal Power Systems was terminated in 2023 amid rising costs, underscoring that regulatory certification alone does not guarantee commercial viability.

With backing from both the federal government and Silicon Valley, nuclear startups are expanding rapidly. However, the increasing fragmentation and privatization of the nuclear energy sector, while potentially beneficial for innovation, also presents notable drawbacks. Nuclear startups have so far demonstrated a concerning disregard for voluntary safety guidelines that were previously tacitly accepted across the sector.

Beyond safety concerns, some critics argue that the emphasis on cutting-edge nuclear technologies and startups may be diverting attention and funding from proven technologies that would more effectively advance nuclear power capacity goals. A recent Wall Street Journal op-ed contended that "The administration is chasing unproven technology when it could encourage Wall Street investment in large-scale reactors," arguing that Trump's nuclear renaissance is stalling as a result.

By Haley Zaremba for Oilprice.com