Nuclear Power Won’t Solve A.I.’s Energy Problem, Says Hedge Fund Mogul David Tepper

With Big Tech locked in an arms race to become the next dominant A.I. player, companies like Microsoft (MSFT) and Amazon (AMZN) are heralding nuclear power as a solution to the technology’s energy problem. But the hedge fund billionaire David Tepper, founder and president of Appaloosa Management, believes nuclear power simply won’t be enough for A.I.’s development needs. “Some of these projections are crazy,” he told CNBC on Sept. 26. “If you’re going to meet the power needs of what they need for A.I., you’re going to have to use natural gas,” he said.

As the likes of Microsoft, Amazon, Google and Meta spend billions of dollars on building data centers to power A.I. models, they have also sought out ways to offset these data centers’ massive energy consumption. Data centers are expected to double their energy use by the end of the decade and take up 9 percent of the power supply in the U.S., according to the Electric Power Institute.

Nuclear power, including the revival of dormant nuclear plants, has emerged as a way to pursue these ambitions without increasing carbon emissions. Microsoft earlier this month signed a power purchase agreement with Constellation Energy, the owner of Pennsylvania’s Three Mile Island plant and the site of a 1979 partial reactor meltdown, in a deal that will reopen one of the site’s two units. And in March, Amazon Web Services struck a $650 million deal with the energy company Talen Energy to acquire a nuclear-powered data center in Pennsylvania.

Despite the tech world’s optimism about nuclear as a carbon-free alternative, Tepper, who is “exploring different parts of the energy side of the tech market,” said there are too many hurdles to cross when it comes to reviving nuclear power. Governors around the country “aren’t going to let their nuclear power come offline—it’s not going to happen, it’s a joke,” Tepper told CNBC. “It will never get by these individual [public utility commissions].”

Tepper currently has an estimated net worth of $21.3 billion. His hedge fund is one of the most successful in recent history, having gained a total of $35 billion since its inception in 1993 and $2.7 billion in 2023 alone. Tepper is also the owner of the NFL’s Carolina Panthers team, which he acquired for around $2.2 billion in 2018.

Energy consumption isn’t the only aspect of A.I. that Tepper is unsure about. In June, Tepper unloaded more than 80 percent of his stake in Nvidia (NVDA), the chip maker leading the A.I. boom. The move, which reduced his Nvidia holding to around $85 million, was caused by Tepper’s belief that the stock “was too high at the time and would come down.” “Unfortunately, we didn’t buy it when it came back down,” he said.

While the billionaire said Nvidia is looking great for 2024 and 2025, he’s less confident about the company’s prospects—and the sustainability of current A.I. hype—in 2026 and 2027. “I just don’t know how you know,” he said. “It’s not my preferred vehicle versus other things that I have more confidence in.”