Nuclear Power’s Comeback: Can NuScale Deliver the Future of Energy?
Nuclear power is increasingly seen as a quick and eco-friendly solution to the energy crisis fueled by the rise of AI-driven data centers. One company, NuScale Power (NYSE: SMR), is positioned to offer a way forward, but questions remain about its potential impact.
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If forecasts hold true, early investors in nuclear technology could find themselves in a lucrative position.
Nuclear Energy on the Rise Again
After a troubled history, nuclear energy is seeing a resurgence. According to the World Nuclear Association, more nuclear power plants have been activated in the last two decades than have been decommissioned. Notably, one of the previously closed reactors at Pennsylvania’s Three Mile Island is expected to resume operations in 2028 to serve a new data center run by Microsoft.
The International Atomic Energy Agency (IAEA) projects a significant jump in global nuclear power use, estimating that it could increase by two and a half times by 2050.
Image source: Getty Images.
Notably, advancements in technology have made nuclear energy safer and more economically viable. Small modular reactors (SMRs), designed to be installed close to demand, are becoming increasingly attractive for use in various industries, including desalination, steel production, and hydrogen fuel development.
The IAEA anticipates that SMRs could contribute to about 25% of new nuclear capabilities over the next 25 years. Furthermore, Straits Research forecasts that the SMR market will grow over 9% annually until 2032, and then accelerate to around 30% yearly until 2043, as technology matures.
NuScale: An Uncertain Investment
Now, let’s turn to NuScale Power.
Currently, NuScale is not profitable and has minimal revenue at this stage. The main appeal for investors lies in its potential future earnings.
NuScale has unique advantages, notably being the only small modular reactor design approved by the United States Nuclear Regulatory Commission. However, competitors are also seeking approval, and some may succeed shortly. NuScale has secured commitments from buyers, including Romania’s Nuclearelectrica and RoPower Nuclear, which plan to purchase six of its reactors. The contracts could be worth billions—significant against its $2 billion market capitalization.
On the downside, concerns abound. As of now, NuScale has not sold any operational SMRs, and its new reactor design, capable of producing 77 megawatts, will not receive regulatory approval until mid-next year. The construction of even one small modular reactor can take several years.
Recently, the company faced setbacks; the Utah Associated Municipal Power Systems halted a major project based on NuScale’s technology, citing cost overruns. This event raises doubts about the feasibility and future of small modular reactors.
Weighing the Risks of Investment
In light of increasing energy needs from AI data centers, small modular reactors have seen renewed interest. If successful, they could drive considerable demand for NuScale’s offerings—transforming a modest investment into significant wealth over time. However, this scenario hinges on many uncertainties.
While it’s true that a $10,000 investment in NuScale Power might, in the best case, yield millionaire returns, the odds of such a payoff are not strong enough to justify the risk. Investing in NuScale is akin to a high-stakes gamble that could lead to either substantial losses or gains.
Potential investors should approach with caution, keeping a close eye on developments. More reliable investment options offer similar upside potential without the percentage of risk associated with NuScale.
Is Now the Time to Buy NuScale Stock?
Before considering an investment in NuScale Power, think critically:
The Motley Fool Stock Advisor analyst team recently highlighted their choice of the 10 best stocks to buy, and NuScale Power was notably absent from this list. The selected stocks have strong potential for impressive returns in the years ahead.
For instance, if Nvidia had been chosen back on April 15, 2005, an initial $1,000 investment would now be valued at approximately $825,513!*
*Stock Advisor returns as of December 23, 2024
James Brumley has no position in any of the mentioned stocks. The Motley Fool has positions in and recommends Microsoft. The Motley Fool also recommends NuScale Power and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a policy regarding disclosures.
The opinions expressed are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
