Oklo (OKLO) — the nuclear power startup backed by OpenAI head Sam Altman — has experienced a significant surge of over 175% in October. This surge comes as major hyperscalers have decided to double down on the nuclear renaissance to power data centers and artificial intelligence.
Nuclear energy-related companies, including Oklo, have been performing well since late September when Microsoft (MSFT) announced a two-decade contract with S&P 500 component Constellation Energy (CEG) to provide nuclear power for the tech giant’s data centers.
Recently, Amazon.com (AMZN) and Alphabet (GOOGL) have also signed nuclear deals, leading to a further rally in nuclear-related stocks. However, many of these stocks are currently overextended.
Both Amazon and Google have announced decisions to invest in the development of emerging small modular reactors (SMRs) technology. While SMRs do not currently exist, there are several companies working on developing this technology. Amazon made an early move towards nuclear power in March by paying $650 million for a Talen Energy (TLNE) nuclear-powered data center campus in Pennsylvania.
Top hyperscalers, which include Amazon, Microsoft, Alphabet, and Meta (META), are increasingly turning to nuclear power as a solution to meet the rising energy consumption demands of data centers.
AI And Nuclear Energy
Throughout 2024, nuclear power and utility stocks have been benefiting from the growth in artificial intelligence energy needs.
The demand for energy in data centers, driven by artificial intelligence systems, is expected to increase significantly in this decade. McKinsey & Co. projects that data center energy demand in the U.S. will grow from around 4% currently to 11%-12% of total energy demand by 2030.
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Many technology companies are partnering with nuclear power providers to secure energy supplies for their data centers.
According to analysts at Morgan Stanley, a “nuclear renaissance” is currently underway. The firm predicts a $1.5 trillion investment in new capacity through 2050.
Morgan Stanley analyst David Arcaro pointed out that the Constellation-Microsoft deal has demonstrated the value of nuclear power for hyperscalers, paving the way for potentially higher prices in future deals.
Stocks Rally
S&P 500 leader Vistra (VST), a nuclear power utilities player, saw a slight decline of 0.6% to 130.37 during Monday’s trading session. VST had surged 3% on Friday.
Another S&P 500 component, Constellation Energy, advanced 1.3% to 273.62 on Monday after a slight dip of 0.4% on Friday. Since the Microsoft-Constellation Energy deal on Sept. 20, Vistra and Constellation Energy have seen gains of 40% and 30%, respectively.
JPMorgan recently initiated coverage of S&P 500 components Constellation Energy and Vistra Energy, giving both VST and CEG an overweight rating. The firm set a price target of 342 on Constellation Energy and 178 on Vistra, representing potential upsides of 22% and 31% compared to current trading levels.
Oklo surged by 22.4% to 22.32 on Monday after a nearly 100% increase the previous week. The stock closed Friday with a 15.9% gain at 18.23. Oklo’s stock price soared by 40.5% on Wednesday after clearing an early entry on Tuesday.
The SMR developer backed by Sam Altman has seen a remarkable surge of 175.8% in October and around 237% since the Microsoft-Constellation Energy deal.
Cathie Wood’s ARK Invest has been accumulating a position in Oklo worth over $2 million since mid-July. Additionally, Peter Thiel is a significant investor in Oklo.
Another SMR-focused company, Nano Nuclear Energy (NNE), also saw a 34.2% increase on Monday, building on an 8.8% gain from Friday. NNE shares had jumped by 37.8% on Wednesday.
NuScale Power (SMR) rose by 4.2% to 18.98 on Monday, following a 1% gain on Friday. NuScale Power shares had surged by 40% on Wednesday.
Uranium refiner Cameco (CCJ) experienced a slight drop of 0.2% on Monday. The stock had jumped by 7.8% to 55.77 on Wednesday, surpassing a 52.32 buy point. Cameco was also highlighted as Wednesday’s IBD Stock Of The Day.
Cameco, based in Canada, is one of the world’s leading providers of uranium, with utilities worldwide relying on the company for nuclear fuel solutions.
Meanwhile, Uranium Energy (UEC), engaged in uranium exploration and development in the U.S. Southwest and Paraguay, declined by about 0.4% on Monday. UEC had increased by 1.3% to 8.46 on Friday, following a 4.7% gain on Thursday.
On Thursday, the company announced approval from the Wyoming Department of Environmental Quality to increase uranium production capacity at a major processing plant.
For more coverage, please follow Kit Norton on X @KitNorton.
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