NuScale Power (SMR +18.33%) stock jumped 23.4% in January as investors continued to pile into the nuclear stock and developer of small modular reactor (SMR) technology. The gain was driven primarily by political tailwinds and a notable analyst upgrade.
NYSE: SMR
Key Data Points
Washington's nuclear push lifts NuScale stock
On Jan. 5, the U.S. House of Representatives Energy Subcommittee held hearings to explore the ambitious nuclear acceleration roadmap laid out by the Trump administration. For a sector that's historically moved at a glacial pace through regulatory red tape, the tone from Washington was striking, with Representatives on both sides of the aisle expressing a desire to expand the technology's place in the energy grid.
The timeline calls for three experimental reactors operational by July 4, 2026, multiple SMRs deployed by the end of 2027, and nuclear power on military bases by 2028. Those are aggressive targets by any measure, and they signal a level of urgency around nuclear energy that the industry hasn't seen in many years.
Image source: Getty Images.
It was big news for NuScale specifically; the company already holds the only SMR design certification from the Nuclear Regulatory Commission, so further regulatory streamlining could meaningfully shorten the path from design approval to deployment and actual revenue.
Bank of America upgrade boosts shares
Then, on Jan. 9, Bank of America gave NuScale stock another boost, upgrading shares from "Underperform" to "Neutral" and setting a $28 price target.
The analysis pointed to a couple of specific positives: NuScale's licensing agreement with the Tennessee Valley Authority and the practical advantages of its light-water reactor design -- an approach built on more proven technology than some of its competitors.
The rally hit a wall late in the month when Microsoft reported earnings that raised questions about the pace of artificial intelligence (AI) infrastructure spending. Despite beating Wall Street's sales and revenue targets, the $37.5 billion in capital expenditures it spent in the quarter spooked investors. That puts the tech behemoth on track to roughly double its capex this year as compared to last year.
While this hit tech and AI stocks especially hard, it also hit stocks whose growth depends on AI, like NuScale.
The monumental energy demand of AI has been the driving force behind the success of NuScale shares over the past two years. If that demand evaporates, it would spell trouble for NuScale stock.
Should you buy NuScale Power stock?
The technology the company is developing is promising, and the opportunity here is huge. But there is a long road to commercialization, and a lot can go wrong. If you have a high risk tolerance, allocate only what you are comfortable losing, and don't mind the stock swinging wildly up and down, then NuScale is a worthy -- and highly speculative -- pick.
