Nuclear energy has moved from the sidelines back into the spotlight, thanks in part to increasing demand for electricity by AI data centers.
We asked Seeking Alpha analysts Julia Ostian and Jack Bowman which stock they thought was the most attractive right now for investors in the nuclear energy space.
Julia Ostian: When it comes to the best player in nuclear space, NuScale Power (NYSE:SMR) is probably the most advanced so far, as they’re the closest to actually building and deploying a small modular reactor. It’s also the only company in the group with an approved reactor design from the U.S. Nuclear Regulatory Commission, or NRC.
Oklo (NYSE:OKLO) has also applied for NRC approval, and it seems like they’ll be getting it in far less time than it took companies in the past, as the government has intervened to accelerate approvals in the industry. This means Oklo could be closing the gap with NuScale Power more quickly than expected.
NuScale Power (NYSE:SMR) generates a small amount of revenue already, unlike other companies. It mostly comes from early-stage projects and engineering work, but it is still revenue. They also have great developments. Their reactor, for example, is modular, basically like a Lego, which allows them to combine multiple small units depending on energy demand. It’s a great concept.
Oklo (NYSE:OKLO), of course, is also ambitious and has government support. But until they have NRC approval, they can’t actually start building a reactor. So, as of now, my top choice would definitely be NuScale Power (SMR), although Oklo (OKLO) could prove to be another strong player over time.
That said, investors should pay attention to the challenges surrounding companies in this space and especially Oklo’s stock. The stock could be extremely volatile until the company starts showing real results, and heavy insider selling doesn’t add confidence.
If I were investing in nuclear stocks right now, I’d do it very cautiously, following the news closely, starting with a small position, and dollar-cost averaging on dips. These stocks are highly volatile, so there will likely be many ups and downs until these companies deliver real developments and start showing meaningful growth.
Jack Bowman: It’s tough to pick one because the nuclear energy industry is very speculative, and there are many bright ideas that have yet to prove themselves (“pre-revenue”) but could bring tremendous opportunity.
I’d have to go with NuScale Power (SMR) if I was forced to pick one, namely because their advanced nuclear reactor design has recently been given regulatory approval. They are the most advanced reactor firm with that approval currently, and that’s a huge first-mover advantage to have in this market.
Flexing that advantage, they recently secured a contract with the Tennessee Valley Authority to deploy several reactors across their network to meet the rising demands of data centers. I’m not too worried about the designs selected by the government for their use, as commercial demand for this technology is likely to far outweigh the government’s demand.
That being said, SMR currently being the only firm with regulatory approval may allow it to sweep up potential government contracts, like the military’s recent announcement, using that first mover’s advantage. It’s easier to select a design that’s already approved for deployment than to go with one still being developed and tested.
If I could have another pick, I’d go with Energy Fuels (NYSE:UUUU), which doesn’t design reactors but mines and processes uranium. While there may be only one or two major winners in the reactor space, I see firms all across the fuel supply side benefitting from the push into nuclear energy. Energy Fuels (NYSE:UUUU) also has the advantage of having mining operations across the light rare earth spectrum, which is experiencing a supply squeeze like uranium, though largely due to political tensions with China.