OKLO vs. SO: Which Nuclear Stock Has Better Risk-Reward?

Core Insights - Nuclear power is gaining attention due to increased electricity demand driven by artificial intelligence and data centers, leading investors to compare advanced reactor developers with established utilities [1] Group 1: Company Profiles - Oklo Inc. (OKLO) is a high-risk, high-reward investment focused on next-generation small reactors, while Southern Company (SO) provides income stability and visible earnings growth through regulated assets [2] - OKLO is developing a utility-like model by owning and operating Aurora small nuclear plants, with revenues expected from long-term power purchase agreements [3] - Southern Company reported adjusted earnings per share of $4.30 for 2025, a 6% increase year-over-year, and projects continued growth in earnings per share through 2028 [8][10] Group 2: Financial Performance - OKLO has a significant liquidity position with approximately $1.2 billion in cash, allowing it to fund several years of licensing and development activities [5] - Southern Company has a five-year capital plan of $81 billion, with 95% allocated to regulated utilities, supporting projected average annual rate base growth of 9% [10][11] - Southern Company has signed contracts totaling 10 gigawatts, with additional contracts nearing execution, ensuring financial stability through long-term agreements [9] Group 3: Risks and Challenges - OKLO faces elevated risks, including previous rejection of its reactor application by the Nuclear Regulatory Commission and ongoing regulatory approvals [6] - Southern Company must manage large capital projects and may dilute existing shareholders by issuing new shares to raise funds [12] - OKLO is still pre-revenue and reported a loss of 20 cents per share in Q3 2025, with expectations of continued losses until late 2027 or 2028 [7][18] Group 4: Market Performance - Over the past three months, Southern Company shares have increased by over 6%, while OKLO shares have declined by 25.3%, indicating a preference for earnings visibility and stability [13] - The price-to-book ratio for Southern Company is less than 3, while OKLO trades at 8.6 times, reflecting the higher risk associated with OKLO's growth narrative [15] Group 5: Earnings Outlook - The Zacks Consensus Estimate for Southern Company's 2026 earnings indicates a growth of 6.5%, while OKLO is projected to experience a 5.5% decline in earnings [17][18] - Southern Company is positioned for multi-year growth, while OKLO's earnings depend on regulatory milestones and capital market conditions [20]