Small modular reactors (SMRs) are compact nuclear reactors producing up to 300 MWe per unit, much smaller than conventional plants. Major tech companies including Google, Amazon, and Oracle are signing multi-decade deals for SMR capacity, driven by rising power demands from cloud infrastructure and AI markets. Key SMR producers NuScale, Oklo, and GE Vernova are positioned to benefit from this growing demand.

Nuclear energy stocks Oklo and NuScale Power face headwinds as public opposition to data center construction rises, with 70% of Americans opposing local data center development. Additionally, increased interest in natural gas as a bridge fuel and the slower commercialization timeline for small modular reactors (SMRs) may reduce demand for their premium-priced technology, potentially pushing adoption timelines further out.

NuScale Power, a small modular reactor (SMR) developer, could be nearing a major catalyst with a potential power purchase agreement (PPA) expected by end of 2026. The company has faced significant challenges including a 40% stock decline in 2026, past project cancellations, and lack of profitability. A signed PPA with the Tennessee Valley Authority for a 6-gigawatt SMR system would provide revenue certainty and could revitalize investor confidence in the SMR industry.

NuScale Power's $4 billion market valuation is largely based on a Tennessee Valley Authority deal to deploy up to 72 of its small modular reactors. However, the agreement is actually between TVA and ENTRA1 Energy (NuScale's commercialization partner), not NuScale directly. Under the structure, ENTRA1 owns and operates the plants while NuScale acts as a supplier with capped module prices. NuScale is already paying ENTRA1 milestone payments ($507.4 million for the first milestone), with a $1.2 billion payment due upon a binding power purchase agreement. The analyst recommends staying on the sidelines until actual module order terms are revealed.

Despite Oklo's 12% stock surge on August 25, the author remains skeptical of the small modular reactor company. With an $8 billion market cap but zero commercial energy income, significant operating losses ($124.2 million in Q2), and years away from its first reactor becoming operational, the author argues the company's hype outpaces its reality. Regulatory hurdles from the NRC and the expensive, unpredictable SMR development process present substantial risks that outweigh long-term prospects until the company achieves its first approved and operational reactor.

Nuclear stocks Oklo and NuScale Power have declined significantly in 2026 despite a promising $10 trillion nuclear energy opportunity driven by AI demand. The decline is attributed to shifts in investor risk appetite, lack of near-term cash flows (commercialization not expected until 2030-2040), ongoing shareholder dilution, and overvaluation at the start of the year when market enthusiasm for SMRs peaked.

Elon Musk has reversed his stance on natural gas, acknowledging it will play a long-term role as a bridge fuel, particularly to support SpaceX's growing energy demands. This shift threatens the near-term growth prospects of small modular reactor (SMR) companies like NuScale Power and Oklo, as AI companies may opt for cheaper natural gas solutions instead of waiting for SMR deployment. The delay could stretch cash flow timelines and increase financial uncertainty for unprofitable SMR developers.

AI data centers powered by Nvidia GPUs require 100-300 kW per rack, creating massive power demands that exceed traditional utility capacity. This bottleneck is driving capital to energy companies that can deliver reliable power through long-term agreements, off-grid solutions, and emerging technologies like small modular reactors and battery storage systems.

Oklo and X-Energy are competing small modular reactor (SMR) companies with different technological approaches. Both are pre-commercial, highly speculative investments with no guaranteed regulatory approval. Oklo appears slightly ahead in development timeline, making it the marginally better choice between two risky bets.

The author argues against investing in NuScale Power despite its promising small modular reactor technology, citing its speculative nature and lack of near-term revenue generation. Instead, he recommends Brookfield Renewable, which offers established operations, meaningful current profits, visible growth through 2031, and indirect nuclear exposure via its 51% stake in Westinghouse Electric.

NuScale Power, the only company with Nuclear Regulatory Commission approval for small modular reactors (SMRs), is positioned to help meet surging AI data center power demands. However, the company's technology won't be deployable until the early 2030s at the earliest, making it a long-term prospect rather than a near-term solution. NuScale has one committed project in Romania expected operational by 2033 and is pursuing additional deals, including potential partnerships with the Tennessee Valley Authority.

NuScale Power reported disappointing Q2 2026 earnings with revenue of just $80,000 (missing estimates by 93%) and a $0.13 loss per share, yet the stock remained flat. While current results are minimal, investors are watching for a potential power purchase agreement (PPA) by end of 2026 that could trigger construction and significantly boost the stock. The company operates in a growing nuclear energy market driven by AI data center demand, but has yet to break ground on any projects pending customer payment commitments.