Sam Altman-backed nuclear energy company Oklo (OKLO) has soared on the stock market over the past month as investors view nuclear energy as the next big AI business.
Shares in the company, which designs so-called small modular nuclear reactors (SMRs), have risen nearly 140% in the past month due to Big Tech’s growing interest in nuclear energy. SMRs are designed to produce cheaper, faster and greener energy than traditional nuclear facilities.
Amazon (AMZN) and Google (GOOG) announced substantial investments in SMR projects in mid-October as they look to balance their climate goals with the growing energy needs of the data centers that power their various AI software. Oracle’s (ORCL) Larry Ellison announced in September that the company plans to build a data center powered by SMRs.
“There is a nuclear energy renaissance underway, with nuclear energy increasingly seen as a solution that solves both the increased need for baseload energy and the need to decarbonize,” wrote Craig-Hallum analyst Eric Stine in a recent note to investors. Base load power refers to the daily energy demand on an electricity grid.
Stine said Google and Amazon’s investments are “really just the beginning of a multi-decade megatrend.”
Goldman Sachs estimates that global energy consumption in data centers will grow 160% by 2030, driven by demand from artificial intelligence. Meanwhile, separate data from the International Atomic Energy Agency shows that nuclear energy production in North America may double by 2050.
Shares of other companies that make similar technology to Oklo’s, such as NuScale (SMƒR) and NANO Nuclear Energy (NNE), also rose on news of Google and Amazon’s investments on Oct. 14 and 16, respectively, before reporting earnings this week compensated..
“The opportunity here in the marketplace is so great that a large number of people will be successful,” Oklo CEO Jacob DeWitte told Yahoo Finance.
According to research from Citi analysts, the SMR market could grow to $300 billion by 2040.
Oklo went public in May through a merger with a special purpose acquisition company, AltC Acquisition Corp., of which Altman co-founded. In addition to Altman, Cathie Wood and Peter Thiel are on the list of investors.
Sam Altman owned a 2.6% stake in the company, according to a June regulatory filing. He became chairman of Oklo in 2024 after serving as CEO for three years.
Although Oklo was founded in 2013, well before the rise of AI, the energy needs of artificial intelligence have been a boon to the company as it builds its customer base, DeWitte said.
“AI does create [up] most of our order book we talked about,” DeWitte said in an interview. This includes customers in the chip sector as well as data centers, he adds. Publicly, the company has said it is working with hyperscalers Equinix and Prometheus Hyperscale. It has not yet announced any deals with Big Tech companies.
But Wall Street analysts warn that the company and its competitors will face regulatory and supply chain hurdles before they can get anywhere close to the amount of power needed to run artificial intelligence data centers.
Nuclear projects have been subject to strict regulations in response to high-profile global meltdowns at Three Mile Island in 1979, Chernobyl in 1986 and Fukushima in 2011. On average, it takes 80 months for the U.S. Nuclear Regulatory Commission to approve the construction of nuclear power plants. in the US, compared to an average of 54 months in Britain, according to research cited by Canaccord Genuity.
Although a number of companies are developing SMRs – including Bill Gates’ TerraPower – none have been deployed in the US to date, and lengthy licensing processes mean profitability is not exactly in sight.
In Oklo’s first earnings report since going public on Aug. 13, the company reported a net loss of about $53 million for the first six months of the year, wider than the loss of about $9 million it posted in the year-earlier period.
Fuel is also an issue for aerospace companies: Many SMRs, such as those from Oklo, NuScale and TerraPower, require a specific type called high-assay low-enriched uranium, also known as HALEU, which is imported from Russia. There is little to no domestic supply, as the West as a whole has avoided developing a HALEU supply chain. That’s because enriched uranium is used in nuclear weapons, according to Canaccord Genuity.
“A developed Western HALEU supply chain is lacking, especially given efforts to limit enrichment due to proliferation concerns,” Canaccord Genuity analyst George Gianarikas wrote in a note to investors early this year.
Citing supply constraints and long and difficult licensing processes, Citi’s Vikram Bagri recently lowered his price target for Oklo shares from $11 to $10.
“There are too many ‘ifs’ in this process,” Bagri said. “It seems that the new technology and new nuclear installations will only happen after 2030. After 2030 it remains to be seen who will be successful and how successful they will be, how many nuclear reactors we will see.”
But Seaport analyst Jeffrey Campbell sees Oklo as having advantages in the fast-growing market, pointing to Oklo’s ability to use “much cheaper” recycled fuel.
While building a traditional nuclear power plant can cost billions of dollars, Oklo has said the cost of bringing one of its SMRs online is a few hundred million dollars.
For his part, DeWitte is optimistic about the future of the market – and Oklo’s place in it. DeWitte cited increasing bipartisan support to reduce regulatory hurdles and increase HALEU’s domestic supply. He said Oklo is unique because the company wants to own and operate its facilities and sell energy directly to customers, rather than the traditional model of licensing its technology to utilities. DeWitte believes this will allow the company to bring its reactors online more quickly.
“In today’s world where these opportunities are so great – diverse customers who need different things, want different things… you’re going to see a diverse ecosystem evolve,” he said. He added: “You won’t see one winner take all.”
Laura Bratton is a reporter for Yahoo Finance. Follow her on X @LauraBratton5.
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