While markets mostly recovered by the end of the month, it was a rough November for investors. Tech stocks were hit hard, along with just about any stocks related to the artificial intelligence (AI) trade, but few companies saw their shares decline as much as Oklo (OKLO 0.47%).
Oklo investors watched as its stock declined as much as 35.4% from the closing bell on Oct. 31, before recovering slightly, finishing the month down 31.2%.
The S&P 500 ticked up 0.1% over the same period, though it fell as much as 4.4% mid-month, while the tech-heavy Nasdaq Composite finished down 1.5%, having slid as much as 6.9%.
NYSE: OKLO
Key Data Points
The company is working to develop small modular reactors (SMR), which, if perfected, would be a great fit for the power-hungry AI data centers that could seriously strain the energy grid in years to come. That narrative has driven Oklo shares up nearly 420% over the past year, but the release of Google's Gemini 3 is making some investors question whether this will hold true.
Google's Gemini 3 threatens the AI energy demand thesis
That's because Gemini 3 was trained not using Nvidia's or Advanced Micro Devices' GPUs, but on Google's own silicon. While it's been public knowledge that Google has been developing its chips, called TPUs, for many years, this is the first time a frontier AI model was trained entirely on TPUs.
While this has wide-ranging implications for the whole market, it's especially relevant to Oklo. One of the biggest advantages TPUs have over GPUs is that they are significantly more energy efficient. If Google continues down this path and other hyperscalers follow -- which could certainly be the case; Meta is reportedly in talks to buy billions of dollars worth of Google TPUs -- AI's energy use could be much less than projected, reducing the demand for Oklo's SMRs.
Image source: Getty Images.
Oklo stock is pricey
This wouldn't be too much of an issue if Oklo stock was priced more reasonably, but investors have driven shares of the pre-revenue company to extreme heights with the belief that AI will create insatiable demand for energy. With that narrative in question, shareholders were left wondering how much of a premium they are willing to pay for the promise of future earnings.
And while I think SMRs present an opportunity, there are too many unknowns to justify Oklo's current valuation, and I would avoid the stock.
