NuScale Power Navigates SMR Market Amidst High Valuation and Future Revenue Projections

Market Focus on NuScale Power Amidst AI-Driven Energy Demand

U.S. equities have shown increased interest in companies poised to address evolving energy demands, with NuScale Power (NYSE: SMR) shares demonstrating considerable movement in 2025. This momentum is largely attributed to a renewed focus on nuclear power, particularly small modular reactor (SMR) technology, driven by the escalating electricity requirements of the artificial intelligence (AI) revolution.

SMR Technology and NuScale's Regulatory Head Start

NuScale Power has achieved a significant milestone with its 77-megawatt SMR design, being the first and only to receive approval from the U.S. Nuclear Regulatory Commission (NRC). This regulatory "moat" provides a substantial advantage in a highly regulated industry. Further commercial validation has been underscored by a landmark agreement with the Tennessee Valley Authority (TVA), which includes provisions for up to 6 GW of capacity. The broader SMR market is projected to expand significantly, with estimates suggesting growth to approximately $20 billion by 2035 from its current nascent stage. Despite this promising outlook, NuScale does not anticipate generating meaningful revenue from its SMRs until 2030 at the earliest. The company's Q2 2025 earnings report revealed an earnings per share (EPS) miss of -$0.13 against a forecast of -$0.11, and revenue of $8.1 million, falling short of the $11.89 million forecast by 31.88%. Following this announcement, the stock experienced a decline of 2.72% to close at $44.68, with an additional 0.83% drop in premarket trading.

Analysis of Market Perception and Valuation

The market's assessment of NuScale Power reflects a blend of optimism for future potential and caution regarding current financial performance. The stock's 149.19% year-to-date return and its recent market capitalization of approximately $12.71 billion (as of Q2 2025 earnings), coupled with a price-to-sales (P/S) ratio exceeding 330 based on trailing annual sales, indicate substantial investor expectations for future growth. This bullish sentiment is primarily fueled by NuScale's pioneering regulatory status and the burgeoning demand for reliable, clean power to support AI infrastructure. However, the recent earnings miss and the extended timeline for revenue generation have introduced a degree of investor skepticism. The company's valuation is largely based on its "massive addressable market and leadership position" rather than immediate profitability.

Broader Market Context and Competitive Landscape

The global SMR market is experiencing rapid investment, with total commitments surpassing $7 billion between 2020 and 2025. Projections extend further, with some analyses suggesting the market could reach $150-300 billion by 2040. NuScale operates within a competitive environment populated by larger and more established entities such as GE Vernova Hitachi, Holtec International, Westinghouse, X-energy, Kairos Power, and Rolls Royce, many of whom possess "deeper pockets as well as more of an established name than NuScale Power." The "AI energy boom" is a critical driver, positioning advanced nuclear energy as a viable solution for baseload power that intermittent renewable sources cannot consistently provide. Furthermore, favorable U.S. government policies, including the Inflation Reduction Act and the ADVANCE Act, offer financial and regulatory support to the industry. Financially, NuScale maintains a strong position with approximately $489.9 million in cash and investments and zero debt, providing operational flexibility. The company's 52-week stock price has ranged between $10.71 and $53.50.

Expert Perspectives

Ramzi Hamady, NuScale's CFO, underscored the company's distinct market position, stating, "We're the only company with two NRC approvals for small modular reactors."

However, some market analyses suggest that despite NuScale's potential to capture a share of the projected SMR market, "much of any long-term growth already seems to be factored in, and then some," given its current market capitalization and the anticipation of future "shareholder dilution or new debt."

Outlook and Future Considerations

Looking ahead, NuScale aims to secure US-based customer contracts by the end of 2025, with a strategic focus on one to two high-quality agreements. Progress continues on the RoPower project in Romania, where a final investment decision (FID) is now anticipated toward late 2026 or early 2027. While the company's "regulatory moat" and robust financial liquidity offer an operational "runway" until major contracts are solidified, significant execution risk persists due to the intricate legal, regulatory, and financing steps inherent in large-scale energy projects. Delays in project timelines or tighter market conditions could potentially lead to increased costs for capital raises or shareholder dilution. Nevertheless, the overarching outlook for the SMR market remains robust, propelled by global energy demands and the critical need for reliable, clean power sources.