NuScale Power (NYSE: SMR) is a popular nuclear energy stock with significant upside potential. The company is valued at just $4 billion despite operating in what could become a $300 billion global market.
In general, Wall Street analysts are bullish on the company. The consensus price target of $11.85 suggests nearly 30% in near-term upside. Two analysts believe shares could double in value over the next 12 months.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
There’s no doubt about NuScale’s potential. The company specializes in small modular reactors, or SMRs. This technology has been around for decades, with only two SMR facilities ever commercialized worldwide. Adoption of SMRs, however, is heating up quickly. More than 80 SMR systems are currently in development, largely thanks to a single catalyst: rapidly rising energy demand from artificial intelligence (AI) companies.
These companies require large amounts of reliable baseload power. And due to climate commitments, much of this emerging power demand must be met by low-carbon generation. AI companies will need more power years down the line, but they also need more power now. That makes SMRs a better fit versus conventional nuclear power plants. SMRs are essentially miniature nuclear power plants that can be built faster and with lower upfront costs. They can also be located directly next to data center infrastructure.
While SMR competitors are currently in the application pipeline, NuScale remains the only company in the U.S. cleared by regulators to construct an SMR system. This reality, combined with AI’s rapidly rising energy needs, paints an optimistic picture for NuScale’s future. But there’s one risk point every investor should be keenly aware of.
This is what worries me about NuScale Power stock
The long-term demand picture for nuclear energy is promising. Bank of America believes it will be a $10 trillion global opportunity through 2050. Importantly, however, Bank of America believes that SMRs will make up a minority of that opportunity. The bank estimates that meaningful SMR adoption will not arrive until 2035 or later.
NuScale is already ahead of the curve with several major projects in its pipeline. For example, it has a 6-gigawatt deal signed with their financing partner, ENTRA1, and a northeastern utility, the Tennessee Valley Authority. If built, this SMR system will be the largest in the world by far. NuScale also has a 462-megawatt deal in Romania that is advancing through government approvals.
