Among current nuclear energy stocks, NuScale Power (SMR) is considered to have the strongest long-term upside potential. The company currently has a relatively modest market capitalization of just $4.1 billion, a trait that leaves room for future growth. At the same time, NuScale Power is developing a new type of nuclear technology—small modular reactors (SMRs).
A research team at Bank of America (BAC) notes that if small modular reactors are commercialized, they could offer five major advantages over traditional large-scale nuclear plants: lower upfront costs, greater safety (at least in theory), modular design, a smaller footprint, and lower carbon dioxide emissions. However, Bank of America also cautions that large-scale application of this technology is not expected until 2030 or 2035, primarily due to the long construction cycles of such systems.
NuScale Power is developing a small light-water reactor, a technology that could help address one of today’s most significant challenges—the transition to carbon-free energy. In addition, the company’s SMR technology can provide electricity to utilities and industrial customers to support artificial intelligence, a key invention of our time.
The case for being bullish on NuScale Power is relatively clear: many energy analysts predict that SMRs will become one of the most important energy sources over the next three decades. And NuScale Power is currently the only U.S. company whose SMR design has been approved by the Nuclear Regulatory Commission (NRC).
Although other nuclear companies, such as Oklo, are also rapidly approaching regulatory approval, NuScale Power’s first-mover advantage gives it more time to solidify its position in the emerging nuclear energy sector, which is estimated to have a potential market value of $10 trillion.
To date, NuScale Power has not yet translated its regulatory edge into actual sales. Its revenue from SMR operations is nearly zero, and it may take years to cover commercialization costs with revenue, let alone achieve net profit. As a result, the company’s stock price is currently down about 75% from its all-time high.
Nevertheless, one thing is clear: future society will have enormous energy needs. Although NuScale Power has not yet built its first reactor, the growth in energy demand and its regulatory leadership position could make it one of the most explosive nuclear energy stocks of the next decade. The average analyst price target is approximately $17, implying nearly 30% upside from the current price. It should be noted that execution risks remain.
NuScale Power, with its first-mover advantage in U.S. regulatory approval for its SMR technology and the flexibility afforded by its small market capitalization, is viewed by some market analysts as a long-term potential player in the nuclear energy sector. However, the company has yet to generate substantial revenue, faces uncertainties in its commercialization path, and its stock price is highly volatile. While investors focus on its technological prospects, they must also remain vigilant about execution risks.
