Uranium mining stocks surged higher on Wednesday, with industry bellwether Cameco (CCJ -0.13%) rising 8.2% through 2:11 p.m. ET, Denison Mines (DNN -1.58%) doing even better with a 14.7% gain, and smaller Energy Fuels (UUUU -2.44%) performing best of all -- up 17%.

Investors are betting on a resurgence in demand for nuclear energy today, and their optimism is not without reason as tech giants like Microsoft (MSFT -1.73%), Alphabet (GOOG -1.55%) (GOOGL -1.45%), and Amazon.com (AMZN -1.45%) place multibillion-dollar bets on the sector.

What's going on with nuclear power?

Last month, Microsoft ignited the rally in nuclear stocks when it signed a power purchase agreement with Constellation Energy (CEG -0.92%) under which the latter will reopen Unit 1 of its Three Mile Island nuclear power plant. Microsoft needs extra power to run the servers at its Azure business unit, and thinks nuclear might be the best way to produce that power in a carbon-free way.

Momentum in the sector picked up this week with announcements from first Alphabet and then Amazon that they, too, are looking to nuclear energy to power their data centers.

Alphabet's Google business is partnering with privately held Kairos Power to open a series of small modular nuclear reactors (SMRs). Totaling only 500 megawatts (MW) in power production capacity, the Google news is only half as big as Microsoft's. (Full-scale nuclear power plants generally generate power in the gigawatt range). But that's not why the Google news is significant. It's backing an entirely new kind of nuclear power plants -- SMRs, which are expected to be both cheaper and faster to build than traditional plants.

In theory, that could drive demand for nuclear energy -- and for uranium to fuel it -- faster than simply building more gigawatt-scale power plants would do. It's this prospect that lies behind the strong interest in uranium producer stocks Wednesday.

Enthusiasm only grew greater Wednesday morning when Amazon announced plans to partner with Energy Northwest, Dominion Energy (D 0.41%), and privately held X-energy to build four SMRs in the state of Washington and at least one in Virginia. Combined, these projects promise to bring at least 620 megawatts of nuclear power online -- and potentially more than 1 gigawatt, equivalent to a full-scale nuclear power plant.

Should you buy uranium stocks now?

But should you be buying uranium stocks in the middle of a uranium stock-buying frenzy? While I'm bullish on the prospects for the nuclear power industry in general and am finding validation for that bullishness in all this recent news, I still think the answer to this question is ... maybe, but tread carefully and watch the valuations.

With a market cap of less than $2 billion even after this latest share price surge, Denison Mines is arguably the cheapest of these three stocks, trading at "only" 47 times trailing earnings. Denison also has no debt on its balance sheet, and $93 million in cash -- which is good news, because it will need it. It's currently burning cash at the rate of $28 million a year, and isn't expected to turn free cash flow positive until 2028, according to the analysts who follow it.

Cameco is a horse of a different color. Valued at more than $24 billion currently, it is easily the most valuable stock in this sector. On the other hand, it trades at a staggering 129 times trailing earnings. Cameco is both profitable and free cash flow positive, and analysts expect its profits to roughly triple over the next five years. Still, with a valuation that's 27.5 times its forecast earnings in 2028, it's hard to call the stock cheap.

And Energy Fuels? With a $1.3 billion market cap, Energy Fuels is only a little less expensive than Denison. Analysts hope Energy Fuels turns profitable next year, and begins generating free cash flow in 2027. It's unprofitable today, however, and in its 25-year history, it hasn't ever generated positive free cash flow.

While Energy Fuels stock looks speculative to me, it possesses cash reserves that should be sufficient to last until its free cash flow turns positive. In a momentum-driven market where none of these stocks looks cheap by the traditional valuation metrics of price to earnings, or price to free cash flow, tiny Energy Fuels might turn out to be the best performer of all.