The race to build the nuclear reactor of the future is heating up, with more than a dozen companies working to crack the code of affordable-but-safe small modular reactors (SMRs). Two of the hottest stocks in this space are NuScale Power (SMR -0.86%), up more than 250% over the past year, and Oklo (OKLO 1.67%), up more than 800%.
But which of these cutting-edge companies is the better long-term investment?
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The early stages
Because neither of these companies nor any of their competitors has yet managed to build a working SMR, it's pointless to comb through their current financial metrics, like revenue and cash flow, in search of differences. Only once they have a viable product to sell -- electricity from a working reactor -- will we be able to assess their relative business models, strengths, and weaknesses.
Similarly, either company could fall victim to one of the common issues with high-tech start-ups: The technology could fail to work at all, or it could work but underperform expectations, or it could encounter problems that require moving back the company's timeline.
Both of these companies are extremely speculative and risky investments. That said, one seems better set up for success.
Oklo takes a different approach...
While NuScale and Oklo are both focused on building SMRs, not all SMRs are created equally.
Oklo, for example, has proposed using "a liquid-metal-cooled, metal-fueled fast reactor," a proven technology able to use spent fuel (aka nuclear waste) from other reactors to generate electricity. Because recycling fuel in this manner doesn't require further uranium enrichment, Oklo anticipates lower operational costs.
The Experimental Breeder Reactor-II, a fast reactor that operated from 1964 to 1994, produced about 20 megawatts (MW) of power. Oklo is working with Idaho National Laboratories to use some of EBR-II's spent fuel to power its proposed Aurora Powerhouse SMR.
Because nuclear reactors require cooling systems to operate safely, Oklo has also made a point of exploring whether its SMRs could share cooling systems with on-site data centers, which also generate a lot of heat and require a lot of electricity. Oklo has specifically marketed its SMRs as a potential power source for the electricity-hungry artificial intelligence (AI) industry. OpenAI's Sam Altman helped take Oklo public through a special purpose acquisition company (SPAC) merger in 2024, and served as its board chair until April.
...but NuScale has design approval
NuScale, on the other hand, uses more conventional technology in its SMR: a light water reactor combined with a steam generator to produce power. It also markets its technology as suitable for many industries, not just AI. But NuScale is farther along in its regulatory journey, having received standard design approval from the U.S. Nuclear Regulatory Commission (NRC) for an uprated 77 megawatts electric (MWe) SMR in May.
It's worth noting that design approval isn't the last step in the (extremely lengthy and complex) process, but it's a significant milestone that Oklo has not yet met. NuScale believes this approval keeps it on track for deployment of a working SMR by 2030.
However, that timeline may not be fast enough, thanks to a surprise announcement.
Who can get there first?
On Aug. 12, the U.S. Department of Energy (DOE) announced it would work with 11 advanced reactor pilot projects to quickly move them toward deployment, with a goal of achieving criticality "of at least three test reactors" by July 4, 2026.
Oklo was selected for three of the 11 projects, including one through its subsidiary Atomic Alchemy. NuScale wasn't on the list, although its primary project site is located in Romania, which may have been ineligible.
However, this DOE initiative could help Oklo leapfrog NuScale in its timeline to deployment. It now projects commercial operations to begin "between late 2027 and early 2028."
With this new development, Oklo seems to have countered one of the biggest arguments in NuScale's favor: that it was closer to deployment than any other SMR company. Although both stocks are speculative and risky for investors right now, Oklo looks like the clear favorite.
