Oklo (OKLO), the nuclear power company backed by Sam Altman, has been booming on the stock market over the past month as investors focus on nuclear energy as the next big AI trade.
Shares of the company, which designs so-called small modular nuclear reactors (SMRs), have soared nearly 140% in the past month as big tech companies’ interest in nuclear power increases. SMRs are designed to produce energy that is cheaper, faster, and more environmentally friendly than traditional nuclear facilities.
In mid-October, Amazon (AMZN) and Google (GOOG) announced significant investments in SMR projects to balance climate change goals with the growing energy demands of the data centers that power their various AI software. I did. In September, Oracle’s (ORCL) Larry Ellison announced that the company intends to build data centers that utilize SMR.
“A nuclear renaissance is underway, with nuclear power solving both the growing demand for baseload electricity and the need for decarbonization,” Craig Hulme analyst Eric Stein wrote in a recent note to investors. “This is attracting increasing attention as a solution.” Baseload electricity refers to the daily energy demand on the power grid.
Stein said Google and Amazon’s investments are “really just the beginning of a multi-decade megatrend.”
Goldman Sachs predicts that global data center power consumption will increase by 160% by 2030 due to demand from artificial intelligence. Meanwhile, separate data from the International Atomic Energy Agency shows that North American nuclear power production could double by 2050.
Shares of other companies that make technology similar to Oklo, such as NuScale (SMƒR) and Nano Nuclear Energy (NNE), also rose on news of investments by Google and Amazon on October 14th and October 16th, respectively. However, prices have slowed this week.
“The opportunity here in the market is so great that there will be a significant number of people who will be successful,” Oklo CEO Jacob DeWitte told Yahoo Finance.
In fact, the SMR market could grow to $300 billion by 2040, according to a study cited by Citi analysts.
Oklo went public in May through a merger with AltC Acquisition Corp., a special purpose acquisition company co-founded by Altman. In addition to Altman, Cathie Wood and Peter Thiel are also on the list of investors.
Sam Altman owned 2.6% of the company, according to a June regulatory filing. He became Oklo’s chairman in 2024 after serving as CEO for three years.
Sam Altman, co-founder and CEO of OpenAI and chairman of Oklo, will speak at Italy Tech Week 2024. (Stefano Guidi/Getty Images) · Stefano Guidi via Getty Images
Oklo was founded in 2013 ahead of the AI boom, and DeWitt said the energy required for artificial intelligence in building its customer roster has been a boon for the company.
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“A big part of the order book that we’ve been talking about is certainly AI,” DeWitt said in an interview. This includes customers in the chip space as well as data centers, he added. The company publicly announced that it is working with hyperscalers Equinix and Prometheus Hyperscale. The company has not yet disclosed any deals with major tech companies.
But Wall Street analysts warned that the company and its competitors face regulatory and supply chain hurdles before they can produce anywhere near the amount of electricity needed to run artificial intelligence data centers. are.
In the wake of high-profile global nuclear meltdowns at Three Mile Island in 1979, Chernobyl in 1986 and Fukushima in 2011, nuclear projects are subject to strict regulations. On average, it takes 80 months for the U.S. Nuclear Regulatory Commission to approve the construction of a nuclear power plant. According to a study cited by Canaccord Genuity, the average time in the UK is 54 months compared to 54 months in the US.
A number of companies, including Bill Gates’ TerraPower, are developing SMRs, but to date none have been deployed in the U.S., and the lengthy licensing process means profitability is not imminent. do.
In its first earnings report since going public on Aug. 13, Oklo reported a net loss of about $53 million for the first half of this year, wider than a loss of about $9 million a year earlier.
Mockup of the Aurora Power Plant in Oklo. (Courtesy: Oklo, Illustration: Gensler) · (Gensler)
Fuel is also an issue for companies in this sector. Many SMRs, such as Oklo, NuScale, and TerraPower, require a specific type called High Analysis Low Enriched Uranium (also known as HALEU), which is imported from Russia. There is little domestic supply as the entire Western world avoids developing HALEU supply chains. According to Canaccord Genuity, enriched uranium is used in nuclear weapons.
“A developed Western HALEU supply chain is lacking, especially given efforts to limit enrichment due to proliferation concerns,” Canaccord Genuity analyst George Gianaricas wrote in a note to investors earlier this year. I wrote.
Citi’s Vikram Bagri recently lowered his price target on Oklo stock from $11 to $10, citing supply constraints and the long and difficult licensing process.
“There are too many ‘what-ifs’ in this process,” Bagri said. “New technologies and new nuclear facilities will likely only be realized after 2030. It remains to be seen who will succeed, how, and how many reactors will be built after 2030.”
But Seaport analyst Jeffrey Campbell sees Oklo’s ability to use “much cheaper” recycled fuel as an advantage in the fast-growing market.
While conventional nuclear power plants cost billions of dollars to build, Oklo said the cost of operating one of its SMRs is hundreds of millions of dollars.
DeWitt is optimistic about the future of the market and Oklo’s place within it. DeWitt noted the growing bipartisan support to reduce regulatory hurdles and strengthen domestic supply of HALEU. He said Oklo is unique because the company aims to own and operate facilities and sell energy directly to customers, rather than the traditional model of licensing technology to power companies. DeWitt believes this will allow the company to get the reactor up and running faster.
Oklo CEO Jacob DeWitt and NYSE Group President Lynn Martin ring the opening bell after Oklo’s IPO. (Provided by Oklo) · NYSE
“In today’s world, this opportunity is so great that we have such diverse customers who need different things and want different things, and we’re going to see a diverse ecosystem evolve,” he said. . He further added, “No one winner will take it all.”
Laura Bratton is a reporter for Yahoo Finance. X Follow her at @LauraBratton5.
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