Oklo (NYSE:OKLO), the nuclear energy startup supported by OpenAI’s Sam Altman, increased by almost 10% during Tuesday’s trading session. So, what is driving this enthusiasm? To begin with, New York recently revealed intentions to construct a significant new nuclear power plant – the first in the U.S. in over 15 years. Governor Kathy Hochul is endorsing the endeavor, which is expected to add at least 1 gigawatt of capacity, coinciding with President Trump’s renewed effort to expedite permitting for large infrastructure projects. Although Oklo has not been mentioned in relation to the prospective New York project, this announcement has rekindled interest in the larger narrative of nuclear energy resurgence, benefiting modern nuclear enterprises like Oklo.
Additionally, there is a geopolitical dimension. Ongoing tensions between Israel and Iran persist, with Iran threatening to obstruct the Strait of Hormuz, a crucial passage for global oil shipments. Should this occur, oil prices could surge, and when energy prices soar, alternative energy sources like nuclear become significantly more appealing to investors and policymakers. There are likely some technical factors influencing this as well. Oklo’s stock fell nearly 20% over the last four trading sessions, and Tuesday’s substantial increase may partially result from investors re-entering at a reduced price.
Innovative Technology of Oklo
The demand for electricity is anticipated to climb sharply in the upcoming years, and nuclear energy is emerging as a compelling solution. Unlike intermittent renewable sources like wind and solar, nuclear provides clean, steady, around-the-clock power. The tech sector is swiftly expanding data centers to meet the energy-intensive requirements of generative artificial intelligence, while President Trump’s significant domestic manufacturing initiative and a broader transition toward electrification continue to elevate power demands.
Oklo is developing compact, fast-spectrum microreactors that aim to provide clean, safe, and economically viable power. The company’s Aurora series of reactors is designed for power capacities ranging from 15 to over 100 megawatts. This represents a significant shift from conventional nuclear power plants in the United States, which typically operate at around 1,000 megawatts. This results in a smaller and much more adaptable footprint. The reactors utilize fast neutrons and liquid-metal cooling, bypassing the complexities of high-pressure systems while enhancing fuel efficiency and safety.
One of Oklo’s hallmark innovations is its utilization of recycled nuclear waste as fuel, turning a persistent challenge into a valuable clean energy asset. With a 10-year operational lifespan and no requirement for on-site fuel handling, these microreactors could be ideally suited for remote and high-demand applications such as AI data centers, industrial locations, and defense facilities. While AI is currently a trending topic, cryptocurrency is back in popularity as well. See Circle Stock: Is A 2x Rise Possible?
Risks in Valuation
However, Oklo stock is not only speculative, but it also poses challenges in terms of valuation. Its financial performance is not relevant at this moment, as it remains pre-revenue. The strategy is to construct, manage, and sell electricity directly to customers through long-term agreements, with plants expected to commence operations from around 2028 to 2029. Until that time, the company will need to consume substantial cash to support research, development, and regulatory activities – without any commercial income to mitigate these expenses.
This situation could exert pressure to secure additional funds, potentially diluting the existing shareholders or necessitating the company to incur debt. Even after the technology is validated and operational, achieving large-scale production will be a significant challenge – one that has impeded many notable startups. The move from prototype development to full-scale production often brings along its own set of technical and operational difficulties. Currently, Oklo shares are trading at approximately $60, with a market capitalization nearing $9 billion.
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