SMR Stock Trades Higher Than Industry at 90.42X P/S: Hold or Fold?

Core Insights - NuScale Power (SMR) shares are currently overvalued with a Value Score of F, trading at a forward 12-month price/sales (P/S) ratio of 90.42X, significantly higher than its median of 29.14X and the Zacks Computer and Technology sector's 6.30X [1][10] - Despite the high valuation, SMR shares have surged 73.2% year-to-date, outperforming the Zacks Computer & Technology sector's 0.4% and the Zacks Electronics-Power Generation industry's 69.5% [4][10] Industry Demand and Growth Drivers - The strong performance of NuScale Power is attributed to high demand for electricity and clean energy, particularly from AI-powered data centers, which require reliable and carbon-free energy [5][7] - Data centers are projected to triple their energy use over the next three years, accounting for 12% of U.S. electricity consumption by 2028, presenting a significant opportunity for NuScale Power's Small Modular Reactor (SMR) technology [8] - The company has made significant progress in manufacturing and commercializing its SMR technology, with key partnerships enhancing its market position [11] Strategic Partnerships and Market Positioning - Major technology companies like Meta Platforms, Microsoft, Alphabet, and Oracle are committing to nuclear energy, including SMR technology, to meet sustainability goals, positively impacting NuScale Power's market positioning [13][16] - Microsoft's planned $80 billion investment in AI-enabled data centers is expected to contribute to a sixfold increase in U.S. power demand over the next 20 years, validating the demand for SMR technology [14] - Meta's goal to seek up to 4 gigawatts of new nuclear power highlights the trend towards securing reliable, clean energy for operations [15] Financial Performance and Estimates - For 2025, the Zacks Consensus Estimate for loss is pegged at 42 cents per share, which has widened by a penny over the past 30 days [17] - NuScale Power's advancements in SMR technology and growing partnerships position it as a key player in sustainable, carbon-free energy [18] Challenges and Market Dynamics - The company faces challenges in a competitive energy market, including the presence of renewable energy sources and regulatory hurdles, which could affect its market positioning [19] - NuScale Power is also dealing with a lack of major customer orders and a tight nuclear supply chain, potentially limiting its production capabilities [20]