The dawn of artificial intelligence (AI) has made a lot of companies household names. One might think of Nvidia or Palantir Technologies, for instance, both of which have skyrocketed over 1,100% and 2,600% respectively since ChatGPT was released at the end of 2022.
Chips and software companies, however, aren't the only ones growing exponentially from AI. Because AI is thirsty for power, energy companies are also now getting attention. Indeed, without energy -- and lots of it -- AI's projected growth rate could be severely stalled, which is why energy companies.
Nano Nuclear Energy (NNE +1.95%), for instance, is racing to invent novel technologies that can give it more juice. That promise alone has helped Nano's shares soar over 90% on the year. The nuclear company is designing something that could theoretically suit AI's energy needs the best.
But since Nano is still years away from being profitable, investors should look closely at the company's story before they load up. Let's dive in and have a look now.
Image source: Getty Images.
A new golden age of nuclear power
In case you haven't noticed, a global nuclear renaissance is underway. After decades of stagnation, nuclear power generation grew at a compound annual growth rate of 14% between 2020 and 2024, according to research by Goldman Sachs. That rate is expected to accelerate, especially with countries like the U.S. pledging to triple or quadruple nuclear capacity by 2050.
At the heart of this renaissance is novel nuclear technology. The power plants of old -- the hourglass cooling towers and steam lifting off them -- were expensive to build and could take a decade or more to construct. The power plants of the future, however, are looking smaller, more compact, and much less expensive to assemble.
NASDAQ: NNE
Key Data Points
That's where Nano comes in. True to its name, Nano Nuclear is developing portable and stationary microreactors. Its portfolio includes three epic designs: KRONOS, a stationary microreactor; ZEUS, a solid-core battery reactor that can be transported on a truck; and LOKI, a microreactor that's designed for both Earth and space deployment.
Alongside these micro modular reactors (MMRs), Nano also plans to produce high-assay low-enriched uranium (HALEU), a type of fuel that could power advanced reactors.
While Nano hasn't built a commercial reactor yet (more on that below), it recently started some site work for a KRONOS prototype at the University of Illinois Urbana-Champaign. A potential customer, BaRupOn, has also signaled interest in deploying Nano's MMRs for a 700-acre AI data center near Houston, Texas.
An epic promise, but nothing concrete to show for it
Nano Nuclear is very much a pre-revenue stock. It has no regulatory approval from the Nuclear Regulatory Commission (NRC), and it hasn't generated a dime of revenue. The company reported a third-quarter net loss of $7.6 million, about 63% wider than the year before.
NNE Net Income (Quarterly) data by YCharts
Regulation remains a tall hurdle. Licensing a new reactor design through the NRC could take years and tens of millions of dollars. Even Oklo, perhaps the most advanced microreactor developer, has yet to get regulatory approval for its powerhouse.
Speaking of Oklo, there's also the question of competition. Nano's designs may be innovative, but they're not unique. Oklo and NuScale Power are both pursuing small modular reactors, while Centrus Energy already holds the only U.S. license to produce HALEU.
Valuation-wise, Nano trades at a market cap north of $2 billion, which is hefty for a company with no sales. Shares have already shot up over 90% on the year, and the company will likely have to get one of its designs approved (or partner with a big name) to see substantial growth from here.
Should you buy Nano Nuclear?
If you believe the world will demand a lot more clean power and that microreactors will deliver it, then Nano Nuclear could be a high-leverage play on that thesis. Given its extreme risk profile, however, I would treat this growth stock at best as a small speculative play, not a core position.
