Nuclear energy could represent a $10 trillion market opportunity, according to Bank of America research. It's not hard to imagine why. The U.S. is leading the world in developing one of the most powerful, energy-intensive technologies that history has ever seen -- aka, artificial intelligence (AI). The power grid, however, is largely incapable of handling the electricity needs of these powerful machines and their data centers.
What AI data centers need is an energy source that's reliable and independent from the grid. Bank of America rightly names small modular reactors (SMRs) as one of these sources. NuScale Power (SMR 5.01%) is currently the frontrunner in developing SMRs.
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SMRs are small nuclear reactors that can work together to generate adjustable amounts of electricity. They're generally pre-made in a factory -- which cuts down on assembly time -- and can function as "mini power plants" to supply clean, reliable power.
Several start-ups are working to develop SMRs. NuScale, however, is the only U.S. nuclear energy company with regulatory approval for an SMR design. Since the regulatory process is typically long, NuScale has a clear head start over competitors like Oklo.
NYSE: SMR
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There is a limited demand for these reactors at the moment, and NuScale is working to match their needs. For instance, NuScale has a deal with the Tennessee Valley Authority (TVA) to deploy up to 6 gigawatts of SMRs across seven states. It's also working with RoPower to deploy six modules at a new SMR power plant in Romania.
The demand for clean, reliable power is growing. NuScale has challenges (like turning a profit), and it's not the only energy company targeting the data center space. Bloom Energy, for example, is also selling on-site power generation, and it's already working with customers in the data center space.
Could NuScale become a millionaire-maker stock? Not anytime soon. It has to become one of the most important nuclear energy companies in the country to get close. Right now, it's nowhere near that. It could drive value over the long run, but approach the stock cautiously as it will likely be volatile over the next half-decade.
