Is Nuclear Energy the Next Power Source for AI?

There is a rising interest in nuclear energy stocks as investors believe these stocks are the next big play, with the focus on artificial intelligence fueling an increasing demand for nuclear energy. In fact, nuclear energy company Oklo (OKLO) has soared by more than 130% over the past month as Big Tech’s interest in nuclear power grows.

Let us look at nuclear energy company Oklo in detail and whether this company and its competitors are worth the hype.

Sam Altman Has a 2.6% Stake in Oklo

Oklo was founded in 2013 and co-founded by Sam Altman, CEO of OpenAI. The company went public earlier this year, and some of its prominent investors include Cathie Wood, founder and CEO of ARK Invest, and Peter Thiel, co-founder of PayPal. According to a company filing from June, Altman has a 2.6% stake in the company.

According to a Yahoo Finance report, the company’s CEO, Jacob Dewitte, commented in an interview, “AI does make [up] the bulk of our order book that we’ve talked about.”

However, there have been concerns about whether small modular nuclear reactor (SMR) companies like Oklo will overcome the regulatory and supply chain hurdles before providing nuclear energy.

Why Is Big Tech Looking at Nuclear Energy?

Nuclear energy companies like Oklo are focusing on small modular nuclear reactors (SMRs), which aim to provide energy that’s cheaper, faster to produce, and greener than traditional nuclear facilities. Besides, tech giants like Amazon (AMZN) and Google (GOOGL) are increasingly looking at nuclear energy as a source of power for their data centers.

As the demand for AI accelerates, data centers consume unprecedented levels of energy. As a result, to meet this rising energy demand, tech companies are turning to nuclear power, which provides continuous, carbon-free electricity, unlike other renewable energy sources like wind and solar.

SMR Companies Face Challenges

Despite these developments, these SMR companies are facing some challenges. These include delays in advanced reactor designs that have led to higher costs. In fact, SMR company NuScale (SMR) made headlines in 2022 as the first company to secure Nuclear Regulatory Commission approval for SMR construction. However, rising project costs forced NuScale to abandon its plans to build six reactors in Idaho.

Furthermore, many SMR companies require a specific fuel called high-assay low-enriched uranium, also known as HALEU, to power their reactors. This fuel is largely imported from Russia, and there is no supply chain for HALEU developed in the West. This means that procuring this fuel is a significant problem for these companies, adding to their woes.

Are Nuclear Energy Stocks a Good Investment?

For investors interested in investing in nuclear energy stocks, we have rounded up those rated a Strong Buy or Moderate Buy by Wall Street analysts using the TipRanks Stock Comparison tool.