Key Points Investor enthusiasm for small nuclear reactors has been soaring. But historical failures and cost overruns should generate caution. 10 stocks we like better than Oklo › It seems as if all eyes are on Oklo (NYSE: OKLO) right now. Shares have surged in value by more than 700% since April. But when you look closer, Oklo's entire industry is skyrocketing. Nuscale Power, another company focused on small modular nuclear reactors, has seen its valuation nearly quadruple since April. Why are st ...

Core Insights - Artificial intelligence (AI) spending is driving a bull market on Wall Street, with major tech companies expected to invest approximately $400 billion in capital expenditures by 2025, contributing to a projected $7 trillion in global data center infrastructure spending by 2030 [1][2]. Company Summaries Constellation Energy (CEG) - CEG is establishing significant partnerships with major tech firms like Microsoft and Meta, securing 20-year power purchase agreements to support their AI initiatives [4]. - The company is set to transform into a leading energy player in the AI era through a $27 billion acquisition of Calpine, enhancing its presence in energy-intensive markets like Texas and California [5]. - CEG's stock has increased by 300% over the past three years, significantly outperforming the S&P 500, and is expected to break out into a new trading range in the upcoming months [13]. Arista Networks (ANET) - ANET serves as a critical networking infrastructure provider for AI and data center environments, with major clients including Microsoft and Meta [14][15]. - The company has experienced substantial revenue growth, from $361 million in 2013 to a projected $7 billion in 2024, with expectations to reach $10.52 billion by 2026 [17]. - ANET's stock has surged 3,700% over the past decade, indicating strong long-term performance, and is anticipated to continue its upward trajectory in the fourth quarter [21].

Core Insights - Oklo Inc. (OKLO) stock has surged nearly 100% in a month due to the artificial intelligence-driven energy boom, with increased energy demand from AI hyperscalers and U.S. government initiatives supporting nuclear energy revival [1][7] - Wall Street acknowledges nuclear energy as a vital component of the AI trade and the expanding energy and infrastructure spending boom, positioning Oklo as a potential long-term winner despite its recent overvaluation [2] - Rolls-Royce (RYCEY) is highlighted as a stable investment in the next-generation nuclear energy sector, leveraging its expertise in nuclear propulsion systems to develop small modular reactors (SMRs) [3][4] Oklo Inc. (OKLO) - Oklo's stock price has reached around $130 per share, reflecting a significant increase in value, but it is considered potentially overheated with high RSI levels and trading well above its 50-day moving average [2][8] - The company is currently pre-revenue, which adds to the investment risk despite its recent performance [2] Rolls-Royce (RYCEY) - Rolls-Royce has experienced a remarkable 1,700% increase in stock price over the past three years, driven by a new CEO focused on profitability and growth [5][17] - The company has reinstated dividends and announced a £1 billion share buyback program, indicating strong financial health and commitment to returning value to shareholders [15] - Rolls-Royce is projected to grow its adjusted earnings per share (EPS) by 50% in FY25 and 17% in FY26, with an EPS forecast of $0.45 for FY25, up from $0.26 in FY24 [16] Industry Outlook - The U.S. government aims to quadruple nuclear energy capacity by 2050, reflecting a strategic partnership with the UK to enhance nuclear energy and AI collaboration [10] - Generative AI platforms are significantly increasing energy demand, with U.S. electricity demand expected to grow by approximately 75% by 2050, highlighting the critical need for expanded energy generation capacity [9] - Rolls-Royce has secured a significant contract with the British government to build SMRs, positioning itself as a leader in the nuclear energy sector [11][14]

Core Insights - NuScale Power's stock has experienced significant volatility, trading between approximately $7 and $51 over the past year, with a notable 58% drawdown despite a 400% increase overall [1][2][8] Company Overview - NuScale Power primarily generates revenue through consulting services for Fluor, a major construction company, which is also a significant investor in NuScale [3] - The consulting work is related to a project with RoPower, a Romanian power company, which is expected to be the first customer for NuScale's small modular nuclear reactors (SMRs) [3] Technology and Market Opportunity - The company aims to manufacture SMRs, which are designed to scale down existing nuclear power technology, making it more cost-effective and easier to build in a factory setting [4][5] - SMRs are expected to incorporate modern safety features and can be deployed closer to population centers, potentially transforming the nuclear power landscape [5] - There is a projected 55% increase in electricity demand in the U.S. from 2020 to 2040, compared to only a 9% increase from 2000 to 2020, indicating a significant market opportunity for SMRs [6] Investment Considerations - The volatility of NuScale's stock may be attributed to market sentiment and the potential for the stock price to outpace the company's actual performance [8] - Currently, NuScale is not profitable and is in the process of building its business, with RoPower not yet officially committed as a customer [9] - The successful transition from zero production to supplying RoPower with six SMRs is critical, and failure to meet this milestone could lead to a significant drop in stock value [10] - Securing RoPower as a customer could pave the way for additional clients, but uncertainties remain regarding the company's future performance [11] Investor Profile - NuScale Power is likely to attract only a small number of aggressive investors who are optimistic about the company's potential and willing to invest for the long term [12]

Core Viewpoint - The UK government has backed Rolls-Royce to build the country's first small modular nuclear reactors (SMRs), marking a significant shift towards nuclear energy and investment in energy security [1][2][3]. Group 1: Government Support and Investment - The UK government will invest £14.2 billion ($19.2 billion) to construct the Sizewell C power station, reinforcing its commitment to nuclear power [2]. - The decision to support SMRs is part of a broader strategy to enhance energy security and create jobs, with the potential to support up to 3,000 jobs [2][3]. Group 2: Industry Impact - Rolls-Royce views the government's decision as a "very significant milestone" for its SMR business, indicating strong future growth prospects [4]. - The SMRs are expected to power approximately 3 million homes once operational in the mid-2030s, contributing to the UK's energy landscape [3].

Industry Overview - President Trump signed an executive order to boost the nuclear energy industry, aiming to overhaul the Nuclear Regulatory Commission and expedite the development of new nuclear power reactors [1] - The executive order is expected to catalyze a resurgence in the nuclear sector, potentially leading to increased demand for nuclear energy [1] Company Insights: NuScale Power - NuScale Power's stock surged following the executive order, reaching all-time highs, although the company currently lacks a marketable product [4][6] - The company is developing small modular reactors (SMRs), which are cheaper and quicker to build compared to traditional nuclear plants, and can be transported closer to population centers [7] - A significant milestone for NuScale will occur in 2025 when RoPower decides on purchasing six SMRs, which could pave the way for future contracts [8] Company Insights: Constellation Energy - Constellation Energy is the leading nuclear power producer in the U.S., with a capacity of 22.1 gigawatts, significantly higher than its nearest competitor [10] - The company sells power under long-term fixed-rate agreements, allowing it to benefit from rising power rates [11] - Constellation is investing in clean energy, including a partnership with Microsoft to restart the Three Mile Island Unit 1 nuclear plant, and is exploring SMR opportunities [12][13] - The company anticipates over 13% compound annual growth in adjusted operating earnings through 2030, with potential for accelerated growth if it finalizes its acquisition of Calpine [14] Company Insights: Cameco - Cameco is positioned to benefit from increased uranium demand as the U.S. aims to quadruple its nuclear energy capacity by 2050 [15] - The company highlighted that nearly 70% of the uranium requirements for future nuclear reactors remain uncovered, indicating a need for approximately 3.2 billion pounds of uranium by 2045 [17] - As one of the largest uranium producers, Cameco is experiencing increased long-term contracting activity and holds a 49% stake in Westinghouse Electric, enhancing its competitive edge [18] - Cameco has a strong financial position, having paid dividends annually since 1991, with a 33% increase last year, making it a favorable investment in the nuclear sector [19]