The red-hot nuclear energy stock has made investors filthy rich this year, but how far can it go?
NuScale Power (SMR 9.32%) stock continues to stun investors. It rocketed 65.3% in October, according to data provided by S&P Global Market Intelligence. Thanks to last month’s rally and investors’ excitement spilling over to this month so far, the nuclear energy stock is up a staggering 550%-plus in 2024, as of this writing.
It took only a couple of non-company-specific events in October to send NuScale Power stock surging.
Big bets on nuclear energy
NuScale Power is a start-up developing scalable, small modular reactor (SMR) plants that aim to provide reliable, carbon-free electricity at a lower cost than the standard large nuclear plants. As more economies seek to replace fossil fuels with low-carbon energy sources, nuclear energy stocks like NuScale Power are grabbing investors’ attention.
NuScale Power stock’s run-up in recent months, however, was driven almost entirely by industry events, and the story continued to play out in October when two monster companies announced investments in SMR technology.
On Oct. 14, technology behemoth Alphabet signed an agreement with Kairos Power to buy nuclear energy from the several SMRs that the latter will build in the coming years. Kairos expects to bring its first SMR online by 2030. Alphabet sees promise in these nuclear reactors, believing their smaller size and modular design “can reduce construction timelines, allow deployment in more places, and make the final project delivery more predictable.”
A couple of days later, e-commerce giant Amazon announced multiple deals backing nuclear energy. They included an agreement with utilities to build four advanced SMRs in Washington State, investment in a privately held developer of SMRs, and an agreement with utility giant Dominion Energy to explore building a small modular reactor near Dominion’s existing North Anna nuclear power station.
Although NuScale Power was nowhere in the picture nor did it announce any deal of its own, the stock still zoomed more than 50% in the week of Alphabet’s and Amazon’s announcements as investors saw bigger potential in nuclear energy, especially SMRs, what with so many global companies investing in it. In September, two other technology giants announced investments in nuclear energy, which sent NuScale Power stock up about 40%.
Should you buy NuScale Power stock?
NuScale Power is still years away from commercializing its flagship “VYOGR” SMR power plants and doesn’t expect to deliver its nuclear power modules before 2028, provided its design and production plans progress as planned.
That said, SMRs look hugely promising; and NuScale Power’s SMR design is the first to be certified by the U.S. Nuclear Regulatory Commission. The company also has engineering and construction giant Fluor‘s backing, has previously received funding from the Department of Energy, and has no debt. NuScale Power just reported its third-quarter numbers, and ended the quarter with a cash and equivalents balance of around $162 million, up 19% year over year. Its net loss also fell to about $46 million in Q3 from $58 million in the year-ago period.
NuScale Power, however, remains a speculative bet; and anyone betting on the stock after its recent run-up should be aware of the risks of investing in a company that’s yet to make its first salable product.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Amazon. The Motley Fool recommends Dominion Energy and NuScale Power. The Motley Fool has a disclosure policy.
