Seven Reasons To Be Skeptical About SMRs

Nvidia is on a tear. Its stock is up nearly 200% this year. The maker of semiconductors for AI is now worth some $3.3 trillion, making it one of the world’s most valuable companies.

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That’s an impressive run. But the meme stock of the moment is NuScale Power. NuScale’s stock is up 844% this year, and a writer for the Motley Fool recently called it “unstoppable.”

The expected power demand for AI and the long-awaited boom in nuclear energy have NuScale and a slew of other SMR companies riding high. In March, Wood Mackenzie estimated the pipeline of SMR projects was worth more than $176 billion and that SMRs could account for as much as 30% of the global nuclear fleet by 2050. Earlier this month, Radiant Industries, which is developing a 1-megawatt reactor, raised $100 million in new funding. Meanwhile, several SMR companies, including TerraPower, Kairos, Natura Resources, and Oklo (whose stock has more than doubled this year), have all begun construction at their sites around the country.

That’s the good news. The less-than-good news is that, aside from NuScale, none of those companies have obtained approval for their reactor designs from the Nuclear Regulatory Commission. Furthermore, none of those SMR companies are profitable. NuScale lost $168 million during the first three quarters of this year. Oklo lost $63 million. (NuScale and Oklo have been targeted by short sellers. See here and here.)

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