The race to power artificial intelligence is forcing tech giants to make a critical choice: send computing into orbit or restart nuclear plants on the ground. While startups like Starcloud are launching AI processors into space to escape Earth's energy crisis, major companies including Microsoft, Google, and Amazon are pouring billions into nuclear energy instead, signaling that nuclear power is the more practical near-term solution for feeding the insatiable appetite of AI data centers.

What Makes Space-Based Data Centers So Difficult?

The concept of orbital data centers sounds futuristic: imagine racks of powerful graphics processing units (GPUs) floating in space, wirelessly communicating with Earth via microwave links. Starcloud pioneered this idea in 2025 by launching an Nvidia-powered GPU to space as a proof of concept, and both SpaceX and Google are investing heavily in the concept. SpaceX even mentioned in its 2026 initial public offering filing that it could deploy AI compute satellites as early as 2028, targeting over 100 kilowatts of computing power per metric ton.

But physics stands in the way. While low-Earth orbit reaches temperatures as cold as minus 250 degrees Fahrenheit, that frigid environment cannot simply cool processors the way Earth's atmosphere does. Space has no atmosphere, which means heat cannot dissipate through conduction or convection. The only way to shed heat in space is through radiation, which would require radiators with enormous surface areas. That's just the beginning of the technical hurdles.

Cosmic rays and other ionizing radiation pose another serious threat. These particles degrade solar panels, heat radiators, and processing chips themselves. While modern satellites use radiation-hardened processor chips, they lack the immense processing power demanded by large language models (LLMs), which are AI systems trained on vast amounts of text to generate human-like responses. Developing new radiation-hardening techniques for AI-grade chips would require years of research and development before orbital data centers could become reality.

Why Is Nuclear Power Winning the Race on Earth?

While space-based concepts remain experimental, major tech companies are moving decisively toward nuclear energy to power their existing and future data centers. In 2026, Microsoft signed a $16 billion contract to restart Three Mile Island's Unit 1, the infamous nuclear facility in Pennsylvania, specifically to feed electricity to Microsoft's data centers. Google has signed deals with two nuclear developers and secured a 1,800-megawatt power agreement for its data centers. Amazon invested $700 million into X-energy, a company specializing in compact nuclear reactors.

This convergence around nuclear power reflects a fundamental reality: nuclear energy is the most feasible near-term solution to meet AI's explosive energy demands. Unlike space-based alternatives that face years of unresolved technical challenges, nuclear plants can be restarted or built within a more manageable timeframe. The secondary benefit is equally important: as major tech companies invest in nuclear infrastructure, the cost of nuclear energy generation is expected to decline across the entire industry.

How Is the Nuclear Industry Responding to This Demand?

The surge in tech investment is coinciding with a broader nuclear renaissance. At Idaho National Laboratory, a 900-square-mile testing ground in the high desert, a new generation of small modular reactors is coming online. Deployable Energy, a startup operating at the facility, recently achieved a major milestone by taking its test reactor "critical," meaning it sustained a chain reaction for the first time, proving the design works.

These micro reactors represent a fundamentally different approach to nuclear power. Rather than massive, expensive plants that generate electricity for a million homes, micro reactors are designed to power roughly a thousand homes and can be deployed to remote locations, military bases, and data centers. Lance Maul, chief operating officer at Deployable Energy, described this moment as transformative for the nation's energy future.

"It's something deployable. It's something that you can put on the back of a truck. It is a fundamentally different proposition," said Lance Maul, chief operating officer at Deployable Energy.

Lance Maul, Chief Operating Officer at Deployable Energy

The Trump administration has accelerated this momentum by fast-tracking reactor permitting and speeding up the approval process. However, this rapid expansion has raised safety concerns among nuclear experts.

What Are the Safety and Regulatory Concerns?

While nuclear optimists see micro reactors as a solution to meet America's rising energy demand without emitting carbon, safety advocates worry that accelerated permitting may compromise oversight. Edwin Lyman, Nuclear Power Safety Director at the Union of Concerned Scientists, expressed concerns about reduced standards around radiation, security, and environmental contamination.

"I have no confidence in the Department of Energy and its oversight of this at all," said Edwin Lyman, Nuclear Power Safety Director at the Union of Concerned Scientists.

Edwin Lyman, Nuclear Power Safety Director at the Union of Concerned Scientists

According to ProPublica reporting cited in the NPR article, the federal commission that oversees commercial nuclear development has lost hundreds of staff members, particularly safety experts, due to Trump administration budget cuts and resignations. Companies testing new reactors will seek approval from this understaffed commission.

Despite these concerns, public opinion is shifting. A March 2026 Gallup poll showed that a majority of Americans still oppose nuclear plants in their local area. However, polling also indicates growing support for the United States emphasizing nuclear power more broadly. In communities like Atomic City, Idaho, where residents live near Idaho National Laboratory, concerns are minimal. Local business owner Vickie O'Haro, who lives 10 miles from the facility, expressed confidence in the safety of nuclear operations in her area.

Steps Tech Companies Are Taking to Secure Nuclear Power

• Long-Term Contracts: Microsoft, Google, and Amazon are signing multi-billion-dollar agreements with nuclear operators and developers to secure dedicated power supplies for their data centers over decades.
• Direct Investment in Reactor Technology: Companies like Amazon are investing hundreds of millions directly into nuclear reactor manufacturers, such as X-energy, to accelerate development of compact reactors tailored for data center applications.
• Restarting Retired Facilities: Tech giants are funding the restart of shuttered nuclear plants, like Three Mile Island, rather than waiting for new construction, to bring power online faster.

The contrast between space-based and nuclear approaches reveals how tech companies prioritize practical solutions over speculative ones. While orbital data centers remain an intriguing long-term possibility, the physics challenges are too significant to solve in the timeframe needed to address the current energy crisis. Nuclear power, despite regulatory and safety questions, offers a proven technology that can be deployed and scaled within years rather than decades.

As AI models grow larger and more powerful, the energy demands will only increase. The decision by Microsoft, Google, Amazon, and other hyperscalers to invest heavily in nuclear infrastructure suggests that the future of AI computing will be powered not by the cold vacuum of space, but by the heat of nuclear fission on Earth.