Move over, AI stock. Nuclear stocks will be the next big thing.
Investors have gravitated towards tech powerhouses such as Nvidia that address the demand for artificial intelligence (AI) chip components, but the data centers that run AI applications like ChatGPT require enormous amounts of power, and the big question now facing investors is which companies will power these “AI factories” going to provide.
That’s the main reason why utilities have been one of the hottest stock market sectors this year, up 28% at recent prices. Vistraan unregulated energy company, is the largest share in the market S&P500with gains of 227% through Wednesday’s close.
In particular, investors have increased their focus on nuclear stocks in recent weeks as a number of new deals have shown that major tech companies are banking on nuclear power as a source of clean energy to power the AI revolution. Microsoft recently signed an agreement with Constellation Energy to restart the Three Mile Island nuclear power plant in Pennsylvania. Alphabet ordered several small nuclear reactors from Kairos Power, and Amazon has just signed a number of nuclear energy agreements.
One little-known nuclear stock that is benefiting from the rise is Okay (NYSE: OKLO)a developer of nuclear fission power plants and a provider of nuclear fuel recycling services. It also has a lot of AI credibility, as OpenAI CEO Sam Altman has been chairman of the board since 2015, shortly after its founding in 2013.
In the five-day period ending October 21, Oklo’s shares rose an incredible 115%, rising in almost every session during that period, as the chart below shows.
Even after a pullback on Wednesday, the stock was still trading for twice its closing price on October 11.
So why is Oklo suddenly rising? Let’s first take a look at the red-hot nuclear power stocks, and then we’ll discuss whether they’re a buy.
There hasn’t been much company-specific news on Oklo this past week. The Department of Energy has approved its Conceptual Safety Design Report for a fuel production facility in Idaho. However, that is more of a routine development for the stock.
Instead, the Oklo jump was driven by the broader interest in the sector sparked by the moves by Amazon and Alphabet, although neither company has specifically contracted with Oklo. The response is based on the general interest in nuclear energy. Peers like it Nuscale force increased by 34% during that period, and Nano nuclear energy increased by 39%.
Some of the gain in Oklo stock is likely tied to Sam Altman, who owns about 6% of the company. Oklo went public in May through a special purpose acquisition company (SPAC) founded by Altman, and its performance was mediocre before last week’s breakout.
Previously the CEO of the startup incubator Y Combinator, Altman used that position to invest in Oklo in 2013 because he was impressed with the company’s mission to build a more efficient nuclear reactor. As CEO of OpenAI, Altman probably has a better understanding of the energy needs of artificial intelligence than most investors.
Oklo has been around for over a decade now and has a market cap of $2.2 billion, but it’s still a development-stage company with no revenue. It reported an operating loss of $17.7 million in the most recent quarter.
The lack of revenue means that valuing the company is essentially pointless, and Oklo was created largely through hype. The company expects to have its first factory up and running in 2026 or 2027, but there is a lot of uncertainty between now and then.
Given the lack of revenue, the wide range of opportunities in the nuclear industry and the uncertainty surrounding the company bringing its first power plant to market, investors should hit the brakes here rather than rush into the stock.
I suspect there will be a better entry point for Oklo after the current wave of nuclear hype passes, but one of his peers could also emerge as a better bet in the small reactor sector. Right now, the risk in Oklo appears to outweigh the potential reward.
Consider the following before buying shares in Oklo:
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions at Amazon. The Motley Fool holds positions in and recommends Alphabet, Amazon, Constellation Energy, Microsoft and Nvidia. The Motley Fool recommends NuScale Power and recommends the following options: long calls in January 2026 for $395 at Microsoft and short calls in January 2026 for $405 at Microsoft. The Motley Fool has a disclosure policy.
This Sam Altman-backed nuclear stockpile has doubled in a week. Is it too late to buy? was originally published by The Motley Fool
