Nuclear power is "in" again. If you don't believe me, just look at nuclear start-up Oklo (OKLO 0.74%). Its share price is up more than 750% (not a typo!) over the past year, thanks in part to the artificial intelligence (AI) boom.
Sounds a bit like another AI-friendly company: Could this be the beginning of an epic Nvidia (NVDA -0.40%)-style success story?
Image source: Getty Images.
Why AI fans love nuclear power
AI requires a lot of processing power and data storage capacity. That's one reason Nvidia's high-end processors are such a favorite among AI companies: They provide best-in-class processing speeds.
However, all that computing uses a lot of electricity. So does maintaining the massive data servers feeding those Nvidia chips. All that electricity usage generates a lot of heat, which then requires heavy-duty cooling systems that eat up even more electricity.
Nuclear power plants also generate heat and require massive cooling systems, but they churn out electricity instead of consuming it. Plus, the energy they generate doesn't rely on fossil fuels. With their comparatively small footprint and internal fuel source, they can even be deployed in some regions where solar and wind power can't.
Oklo's primary product in development -- small modular nuclear reactors (SMRs) -- could easily be housed in a data processing facility. In fact, the company is collaborating with Vertiv (VRT -0.62%) to co-develop cooling systems for nuclear-powered data centers.
It also didn't hurt Oklo's AI cred to have OpenAI CEO Sam Altman serving as board chair before he stepped down in April to avoid potential conflicts of interest between Oklo and other AI companies.
Why Nvidia fans shouldn't count Oklo out
Oklo is one of several companies trying to develop a commercially viable SMR. The company is also utilizing fast reactor technology that can use recycled nuclear fuel. Although Oklo has not yet deployed a working product, it has begun working through the regulatory process and hopes to deploy in 2027.
However, the Trump administration has bigger plans for nuclear power and for Oklo. In an executive order signed in May, President Donald Trump directed the U.S. Department of Energy (DOE) to accelerate the testing and deployment of advanced nuclear reactors, with a goal of having three operational reactors by July 2026.
On Aug. 12, the DOE announced that Oklo was selected as one of 11 companies chosen for the Nuclear Reactor Pilot Program. The company says this could further accelerate its time to market.
Why Nvidia fans shouldn't count on Oklo
Oklo's shares have had an impressive run, but since the Aug. 12 DOE announcement, they've actually slid by more than 15%.
Nvidia's shares had their ups and downs, too, but things are a bit different for Oklo.
For one thing, Oklo has not yet produced a commercially viable product ... or even a working prototype. Nvidia, on the other hand, had already demonstrated its dominance in graphics processing units (GPUs) well before its stock's AI-fueled rise began. Meanwhile, the fact that Oklo is only one of 11 companies selected by the DOE for its pilot program suggests it may not end up being the eventual winner, even if SMR technology does take off.
And while Nvidia was already raking in money hand over fist when the AI boom began, Oklo has no current revenue streams and likely won't for years. Even if it's wildly successful and launches a working pilot SMR in 2026, achieving scale and profitability will almost certainly take several more years.
It's possible that Oklo could become a wildly successful maker of SMRs and ride an AI boom to massive scale and profitability, but right now it's a very risky bet on an unproven company using unproven technology. Investors looking for the next Nvidia should remember that and not invest money they can't afford to lose.
