Shares of Oklo (OKLO), a nuclear power company backed by Sam Altman, have experienced a remarkable rise in the stock market over the past month, as investors increasingly view nuclear energy as the next significant opportunity following the AI boom.
The company, which specializes in developing small modular nuclear reactors (SMRs), has seen its stock price soar nearly 140% recently, fueled by heightened interest from major technology firms in nuclear energy solutions. SMRs are touted for their potential to deliver energy that is cheaper, faster, and more environmentally friendly compared to traditional nuclear plants. In mid-October, both Amazon (AMZN) and Google (GOOG) announced substantial investments in SMR projects, aiming to reconcile their climate commitments with the growing energy demands of their AI-driven data centers. Additionally, Oracle’s Larry Ellison disclosed plans for a data center powered by SMRs back in September.
Craig-Hallum analyst Eric Stine noted in a recent report, “A nuclear power renaissance is underway, with nuclear energy increasingly recognized as a solution to both the rising demand for baseload power and the imperative to decarbonize.” Baseload power refers to the consistent energy supply needed to meet daily electricity consumption.
Stine emphasized that the investments from Google and Amazon mark the beginning of a significant, long-term trend in the energy sector. Goldman Sachs projects that global power consumption by data centers will increase by 160% by 2030, driven primarily by AI advancements. Concurrently, the International Atomic Energy Agency anticipates that nuclear power generation in North America could double by 2050.
Other companies in the SMR space, such as NuScale (SMR) and NANO Nuclear Energy (NNE), have also seen their stock prices climb following the announcements from Google and Amazon earlier this month, although some gains have since been trimmed. Oklo CEO Jacob DeWitte remarked to Yahoo Finance, “The opportunity in this market is so massive that there will be many successful players.”
According to Citi analysts, the SMR market could grow to $300 billion by 2040. Oklo made its public debut in May through a merger with AltC Acquisition Corp., a special purpose acquisition company co-founded by Altman. Alongside Altman, prominent investors such as Cathie Wood and Peter Thiel have supported the company.
Sam Altman held a 2.6% stake in Oklo as of June, and he transitioned from CEO to chair of the company in 2024. Although Oklo was founded in 2013, prior to the AI surge, the increasing energy needs driven by AI have provided a boost to the company’s client base, according to DeWitte.
He noted, “AI constitutes the majority of our order book,” mentioning clients in the semiconductor sector as well as data centers. The company has publicly stated that it is collaborating with hyperscalers such as Equinix and Prometheus Hyperscale, but has not yet disclosed any agreements with major tech companies.
However, analysts on Wall Street caution that Oklo and its competitors must navigate significant regulatory and supply chain challenges before they can meet the energy demands of AI data centers.
Nuclear projects are subject to stringent regulations due to past nuclear accidents, including those at Three Mile Island, Chernobyl, and Fukushima. On average, the U.S. Nuclear Regulatory Commission takes approximately 80 months to approve the construction of nuclear facilities, compared to an average of 54 months in the UK, according to research by Canaccord Genuity.
Although numerous companies are pursuing SMR technology, including Bill Gates’ TerraPower, none have yet been deployed in the United States. Lengthy licensing processes hinder profitability in the near term.
In its first earnings report following its public offering on August 13, Oklo revealed a net loss of about $53 million for the first half of the year, significantly wider than the $9 million loss reported in the same period the previous year.
Fuel supply presents another challenge for companies in this sector. Many SMRs, including those from Oklo, NuScale, and TerraPower, rely on high-assay low-enriched uranium (HALEU), which is predominantly sourced from Russia. The lack of a domestic HALEU supply chain is concerning, particularly given Western efforts to restrict uranium enrichment due to proliferation risks, as highlighted by Canaccord Genuity analyst George Gianarikas.
In light of supply constraints and lengthy licensing processes, Citi analyst Vikram Bagri recently lowered his price target for Oklo stock from $11 to $10, citing numerous uncertainties. “There are too many ‘ifs’ in this process,” he stated. “It appears that new technology and nuclear installations may only materialize after 2030.”
Despite these challenges, Seaport analyst Jeffrey Campbell believes Oklo possesses distinct advantages in the emerging market, especially its capability to utilize significantly cheaper recycled fuel.
Whereas traditional nuclear plants can cost billions to construct, Oklo has estimated that bringing one of its SMRs online would require only a few hundred million dollars.
DeWitte remains optimistic about the company’s prospects, highlighting increasing bipartisan support aimed at reducing regulatory barriers and enhancing the domestic supply of HALEU. He emphasized that Oklo’s strategy to own and operate its facilities and directly sell energy to customers sets it apart from the conventional model of licensing technology to utilities, potentially allowing for faster reactor deployment.
“In today’s landscape, with such a vast opportunity and diverse customer needs, we expect to see a dynamic ecosystem develop,” he noted. “It’s unlikely that there will be a single dominant player in this market.”
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