Small Modular Reactor Companies See Stock Surges Amidst Commercialization Hurdles

Small Modular Reactor Sector Experiences Significant Gains

The Small Modular Reactor (SMR) sector has witnessed substantial market activity, with companies like Oklo and NuScale Power experiencing considerable stock appreciation. Since April, shares of Oklo (OKLO) have surged by more than 700%, while NuScale Power (SMR) has seen its valuation nearly quadruple. This pronounced uplift reflects a speculative investor interest in advanced nuclear technologies, despite historical challenges and ongoing commercial viability questions within the industry.

Performance Overview of Key SMR Players

The broader SMR-related market has also shown robust performance. Beyond Oklo's 552.7% gain and NuScale Power's 134% rise since April, other companies linked to the nuclear energy renaissance have recorded significant increases. GE Vernova advanced by 83.4%, BWX Technologies by 71.8%, Cameco Corp. by 66.2%, and Constellation Energy Corp. by 62.8%. NuScale Power's stock, specifically, has climbed 223% over the past year and 375% from its year-to-date low in April, bolstered by design approval from the U.S. Nuclear Regulatory Commission (NRC) for its SMR technology, making it the first and currently only SMR to achieve such a milestone.

Drivers of Market Enthusiasm and Underlying Concerns

The fervent investor enthusiasm for SMRs is primarily driven by the escalating demand for reliable, carbon-free baseload power, largely from AI data centers. Tech giants such as Amazon and Google are actively pursuing deals with nuclear companies, with Amazon notably investing in X-Energy to directly finance reactor construction. The Trump administration's efforts to revitalize the U.S. nuclear industry have further fueled this sentiment. However, significant concerns persist regarding the commercial feasibility and financial sustainability of these ventures. Many SMR startups, including Oklo, are not projected to generate revenue until 2027 or later and are expected to remain unprofitable for several years thereafter. Historical cost overruns in nuclear projects, lengthy regulatory processes, and the absence of firm customer orders for many companies contribute to a cautious outlook.

Broader Market Implications and Strategic Partnerships

The global SMR market, valued at $5.81 billion in 2024, is projected to reach $8.37 billion by 2032, indicating strong long-term prospects. Strategic investments are flowing into the sector, with X-Energy, TerraPower, NuScale Power, and Newcleo collectively securing nearly 92% of the $3.2 billion in equity funding directed towards SMR firms over the past eight years. Notably, Amazon is financing four Xe-100 reactors in Washington, and HD Hyundai has partnered with TerraPower to industrialize SMR manufacturing. Government support is also evident, with Italy considering a strategic investment in Newcleo and the Canadian government providing substantial backing for the Darlington SMR project, slated for operation by 2030. Despite the positive investment climate, the Carbon Free Power Project (CFPP) involving NuScale was mutually terminated due to escalating costs, underscoring inherent financial hurdles.

Expert Perspectives and Valuation Risks

Analysts have expressed reservations regarding the sector's current valuations. JPMorgan's Rama Variankaval noted "unrealistic optimism" given the industry's history of construction overruns and unproven SMR economics. Bank of America (BofA) downgraded both Oklo and NuScale Power in September 2025, citing that their valuations are "running ahead of reality." BofA analysts Dimple Gosai and Christopher Souther indicated that reverse discounted cash flow (DCF) analyses imply deployment ramps and discount rates that are "unrealistic." For instance, Oklo trades at approximately 130 times negative earnings and reported an operating loss of $17.9 million in Q1 2025. Insider selling by Oklo's CEO, COO, and CFO in June 2025, totaling millions, further highlights concerns about potential shareholder dilution as the company faces an accelerating cash burn and a need for future equity financing.

"The tech-heavy Nasdaq recorded its best day since February, driven by a 4.5% jump in shares of NVIDIA Corp. (NVDA)." While this quote refers to a different event, the cautionary sentiment from analysts like those at BofA suggests similar concerns about rapid valuation increases ahead of concrete commercial milestones in the SMR sector.

Outlook and Key Factors to Monitor

The future trajectory of the SMR sector hinges on several critical factors. Securing binding power purchase agreements (PPAs), not just non-binding memorandums of understanding, is paramount for proving commercial viability. Regulatory approvals, such as the NRC's progress with NuScale, remain crucial, though Oklo faced an NRC rejection of its initial license application in 2020. The supply chain for advanced nuclear reactors, particularly the availability of High-Assay Low-Enriched Uranium (HALEU) fuel, presents another challenge, as commercial-scale production is currently limited. Investors should closely monitor upcoming financial results, such as NuScale's Q3 2025 report scheduled for November 6, 2025, and tangible progress on construction schedules and firm customer commitments rather than just headlines, given the significant operational and financial risks inherent in bringing this technology to market at scale.