Against the backdrop of global investors viewing nuclear energy as a critical support for future AI development, the nuclear power company Oklo (OKLO.US), invested in by OpenAI CEO Sam Altman, has shown impressive performance over the past month, with its stock price soaring nearly 140%. Oklo focuses on developing small modular reactors (SMRs), aiming to meet the world's growing energy demands by providing faster, more economical, and more environmentally friendly energy. With increasing interest in nuclear energy from tech giants, Oklo is highly sought after in the capital markets.
Small modular reactors are considered an alternative to traditional nuclear power, with advantages such as faster construction and relatively lower costs. In mid-October, Amazon (AMZN.US) and Google (GOOGL.US) announced major investments in SMR projects, aiming to balance their climate goals with the growing power needs of AI data centers. In September, Oracle (ORCL.US) CEO Larry Ellison also announced plans to build a data center powered by SMR to support its technological expansion.
Craig-Hallum analyst Eric Stine noted in a report that the global revival of nuclear energy is gradually unfolding, with nuclear power increasingly seen as a solution to grid base load demand and decarbonization requirements. Stine also mentioned that Google's and Amazon's investments are just the beginning of this long-term trend. Goldman Sachs expects that due to the rapid expansion of the AI industry, global data center energy demand will grow by 160% by 2030. Meanwhile, the International Atomic Energy Agency predicts that nuclear power production in North America could double by 2050.
After the news of Google and Amazon investing in Oklo, other companies with similar technology, such as NuScale (SMR.US) and NANO Nuclear Energy (NNE.US), also saw significant short-term stock price jumps. However, these gains have receded this week.
Oklo CEO Jacob DeWitte said in an interview that the market opportunity is huge, and more companies will benefit from it in the future. He also revealed that although Oklo was established as early as 2013, well before the rise of artificial intelligence, the rapid development of the AI industry has brought new business opportunities to the company. Currently, a significant portion of its orders come from customers in the chip and data center sectors.
However, the rapid market development also comes with significant challenges. Analysts warn that before Oklo and similar companies can scale production to meet AI data center power demands, they must overcome regulatory and supply chain hurdles. Since the nuclear leaks of Three Mile Island, Chernobyl, and Fukushima, nuclear projects have faced stringent regulations. According to Canaccord Genuity's research, the U.S. Nuclear Regulatory Commission's approval process for nuclear plants takes an average of 80 months, while the UK's process takes 54 months. Even though many companies, including Bill Gates' TerraPower, are working to develop small reactors, deployment in the U.S. has yet to be realized.
Oklo's first financial report since its listing on August 13 showed a net loss of $53 million for the first six months of this year, compared to a $9 million loss in the same period last year. Faced with these challenges, Oklo and its competitors still need to explore how to achieve profitability amidst a strict regulatory environment and lengthy approval processes.
Fuel supply issues are also a major challenge for the current SMR industry. Companies like Oklo, NuScale, and TerraPower rely on high-assay low-enriched uranium (HALEU), which is mainly imported from Russia. As Western countries generally avoid developing a high-enriched uranium supply chain, there are almost no relevant supply channels domestically in the U.S. Canaccord Genuity's research points out that high-enriched uranium is strictly controlled as it can be used to make nuclear weapons.
Citi analyst Vikram Bagri expressed concern about this, recently lowering Oklo's target stock price from $11 to $10, stating that there are many uncertainties in this rapidly developing industry. He noted that new technologies and the deployment of nuclear facilities might not occur until after 2030, and which companies will succeed remains unknown.
However, Seaport analyst Jeffrey Campbell believes Oklo has an advantage in this rapidly developing market, pointing out that Oklo can use "more affordable" recycled fuel, thereby reducing costs.
DeWitte expressed confidence in the prospects of the nuclear market and Oklo's future. He mentioned that both U.S. political parties are gradually supporting the reduction of regulatory barriers for nuclear projects while promoting increased domestic HALEU supply. Unlike other companies, Oklo seeks to own and operate its facilities, providing energy directly to customers rather than following the traditional licensing model. DeWitte is convinced that this model will help Oklo achieve commercial deployment of reactors more quickly.
