Citrini
· Citrini Research
· February 11, 2026 at 20:36
· ⏱ 12 min read
| Read on Substack ↗
Summary
=== SUMMARY ===
•Capital is rotating from "bits" (software) to "atoms" (physical materials, infrastructure) due to the massive physical resource requirements of the AI buildout and the simultaneous "AI Disruption Discount" being applied to software business models.
•The most attractive "atoms" trades are in niche, constrained supply chains with high barriers to entry (e.g., process knowledge, customer qualifications) and multiple, converging demand tailwinds (e.g., AI + Defense + Electrification), which the market has not yet fully priced in.
Summary
Capital is rotating from software (bits) to physical assets (atoms) because AI's real-world constraints on power and materials cannot be prompted away. The article argues that companies with hard-to-replicate physical moats—like Solstice Advanced Materials (SOLS), the only US uranium conversion monopoly—are undervalued and poised for dramatic margin expansion as legacy contracts reprice, making them attractive long-term plays in a crowded 'atoms' trade.
•Software valuations are being repriced with an 'AI Disruption Discount' as agentic AI threatens business models, while physical-world bottlenecks (power, materials) become the binding constraints on AI growth.
•SOLS operates the only US uranium hexafluoride (UF6) conversion plant (Metropolis Works), representing ~20% of global conversion capacity, with a $2 billion backlog.
•Legacy conversion contracts at ~$20/kgU are rolling off over 2-3 years and being replaced at spot ~$64/kgU, tripling revenue per unit with identical production costs, driving mechanical margin expansion to 60%.
•The author models SOLS's AES segment at 7.6x EV/EBITDA on 2028E EBIT of $500M (after conservative 25% haircut), versus peers like Centrus Energy (LEU) trading at 33x and Cameco's fuel services at 14-17x.
•The bull case for SOLS implies a triple from current levels by 2028, driven by contract repricing, capacity expansion, and potential demand from nuclear renaissance (60+ reactors under construction, AI PPAs).
•Other 'atom' picks mentioned (beryllium, titanium, electrical steel) are detailed in the paywalled section, but the article emphasizes they share characteristics: high barriers, multi-year qualifications, and multiple demand tailwinds from defense, electrification, and AI.
Article notes Cameco runs one of few global conversion facilities (Port Hope) near capacity, and with Russian supply sanctioned and Orano also tight, the conversion market is structurally tight – bene
Article notes Cameco runs one of few global conversion facilities (Port Hope) near capacity, and with Russian supply sanctioned and Orano also tight, the conversion market is structurally tight – benefiting Cameco as a major Western supplier.
Risk: Operational risks at aging facilities; uranium price volatility; political exposure to Canadian and US nuclear policy.
SOLS operates the only US uranium hexafluoride conversion facility; legacy contracts at $20/kgU are rolling off and being repriced at ~$64/kgU, driving margin expansion to 60%+ and a base case target
SOLS operates the only US uranium hexafluoride conversion facility; legacy contracts at $20/kgU are rolling off and being repriced at ~$64/kgU, driving margin expansion to 60%+ and a base case target of $95-105 per share.
Author explicitly states that after stripping out non-AES businesses, Centrus Energy's AES nuclear segment is valued at $3.2B EV, which they 'strongly believe is far too low' – implying LEU's core enr
Author explicitly states that after stripping out non-AES businesses, Centrus Energy's AES nuclear segment is valued at $3.2B EV, which they 'strongly believe is far too low' – implying LEU's core enrichment business is undervalued relative to peers and the nuclear cycle.
Risk: Dependence on DOE contracts and regulatory approvals; enrichment market could face competition from new entrants or technology shifts.
This newsletter, published February 11, 2026,
features Citrini
discussing CCJ, SOLS, LEU.
3 trade ideas extracted by AI with direction and confidence scoring.