Oklo (OKLO +5.52%) sits at the intersection of two powerful trends in energy and technology. Electricity demands from artificial intelligence (AI) data centers are surging, threatening to strain an aging grid, while climate goals have revitalized interest in nuclear power after decades of stagnation.
Oklo, however, only became a publicly traded company in May 2024. It has no revenue, no operating reactors, and no commercial license to sell power. Indeed, Oklo today is the type of hyped-up stock that, if it walked into a potluck, half the room would be awed by its potential, half would call it the future, and only the cynics in the corner would ask why it didn't bring anything to eat or drink.
NYSE: OKLO
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That doesn't mean Oklo won't grow into its $11 billion market capitalization. But with the stock already trading at a premium, investors should be willing to play the cynic for a moment and ask: Is Oklo worth buying at today's price?
A 14-gigawatt pipeline, a 187-reactor challenge
Oklo is a pioneer in developing small fast-reactor nuclear reactors. These are essentially micro nuclear power plants that are factory-built, deployable to remote areas, and supply clean, continuous energy. They can run on both fresh and recycled fuel, and they have the backing of AI tech leaders like Sam Altman.
In its short life, Oklo has already forged partnerships with Equinix and Meta Platforms. And while it hasn't built a commercial reactor yet, it's working with the U.S. Department of Energy to build its first-ever reactor at the Idaho National Lab. It also reportedly has a backlog of potential projects that could total about 14 gigawatts (GW).
Image source: Oklo.
A backlog of 14 GW sounds impressive. But what does that number actually mean for revenue?
In a 2024 investor presentation, the company claimed its Aurora powerhouse could sell electricity for between $40 and $90 per megawatt-hour (MWh). In that range, 14 GW would generate between $5 billion and $11 billion a year in recurring annual revenue -- assuming that its reactors are running 24/7.
If Oklo could theoretically build 14 GW of nuclear capacity, it would potentially generate revenue on par with its current market valuation.
But here's the kicker: 14 GW of nuclear power will require a lot of reactors. For example, if it only deployed its larger 75-megawatt (MW) version of Aurora, it would still need to build roughly 187 reactors to reach 14 GW.
And Oklo doesn't even have one right now.
The cost of building these reactors could also be staggering at first. One analyst at BloombergNEF, for example, estimated that it would cost $350 million to $400 million to build a single 75 MW powerhouse for Meta's planned 1.2 GW campus in Ohio. The project will likely need 16 reactors, which would then cost between $5.6 billion and $6.4 billion. At $90 per MWh, the campus would need to run for six or seven years before it covered the upfront construction costs alone.
Of course, this is all hypothetical. At this point, we simply don't know the economics around Oklo's powerhouses. That, I think, is why the nuclear stock isn't a buy for everyone. The opportunity is real, but so are the risks, and the distance between concept and execution is too wide to treat Oklo like anything other than a speculative play on energy.
