Oklo, a nuclear power company backed by Sam Altman, has experienced significant growth in the stock market as investors look towards nuclear energy as the next big AI trade. Shares in the company, which designs small modular nuclear reactors (SMRs), have surged nearly 140% in the past month due to increasing interest from big tech companies, such as Amazon (AMZN) and Google (GOOG).
These companies have invested in SMR projects to balance their climate goals with the rising energy demands needed to run their data centers, which power various AI software. The potential for a nuclear power renaissance is growing, with nuclear energy viewed as a solution that can address the increasing need for baseload power and help decarbonize the world.
Craig-Hallum analyst, Eric Stine, said that Google and Amazon’s investments mark the beginning of a multi-decade megatrend. Goldman Sachs estimates that global data center power consumption will grow 160% by 2030 due to demand from artificial intelligence, while data from the International Atomic Energy Agency shows nuclear power production in North America potentially doubling by 2050.
Other firms making similar technology to Oklo, such as NuScale (SMƒR) and NANO Nuclear Energy (NNE), have also experienced growth in their stocks following news of Google’s and Amazon’s investments. Jacob DeWitte, CEO of Oklo, believes the SMR market could grow to $300 billion by 2040. Oklo went public in May through a merger with a special purpose acquisition company, AltC Acquisition Corp., co-founded by Sam Altman.
Altman also owns a 2.6% stake in the company. Oklo was founded in 2013 and has benefited from the energy needs of artificial intelligence. However, Wall Street analysts caution that the company and its competitors face regulatory and supply chain obstacles before they can produce enough power to run AI data centers.
Nuclear projects have been subject to stringent regulations since high-profile global nuclear meltdowns in 1979, 1986, and 2011. On average, it takes the US Nuclear Regulatory Commission 80 months to approve nuclear plant construction in the US, compared to an average of 54 months in the UK. While companies like Oklo, NuScale, and TerraPower are developing SMRs, none have been deployed in the US to date, and long licensing processes mean profitability is not yet on the horizon.
In Oklo’s first earnings report since going public, the company reported a net loss of about $53 million for the first six months of the year, wider than the roughly $9 million loss it posted in the year-earlier period. Fuel is also an issue for companies in the space, as many SMRs require high-assay low-enriched uranium (HALEU), which is imported from Russia.
There is little to no domestic supply due to the West’s avoidance of developing a HALEU supply chain. Enriched uranium is used in nuclear weapons, which makes the development of a Western HALEU supply chain difficult. Despite these challenges, some analysts, such as Seaport’s Jeffrey Campbell, see Oklo having advantages in the growing market, citing its ability to use cheaper recycled fuel.
Oklo’s CEO, Jacob DeWitte, remains optimistic about the future of the market and Oklo’s place in it, citing mounting bipartisan support to reduce regulatory hurdles and enhance the domestic supply of HALEU. DeWitte believes Oklo’s unique approach of owning and operating its facilities and selling energy directly to customers will enable the company to bring its reactors online faster.
