Should You Forget Ripple and Buy This Nuclear Stock Instead?

Ripple (CRYPTO: XRP) is one of my favorite investments for investors willing to take on extra risk for maximum upside potential. The crypto project has a market cap of just $90 billion, yet it's seeking to replace conventional payment protocols that handle trillions of dollars on a daily basis. No one knows yet if Ripple will ever be successful at scale, but the upside potential is truly lucrative.

But Ripple isn't the only investment chasing a multi-trillion-dollar opportunity. Right now, Bank of America analysts believe that there's a $10 trillion opportunity ahead for nuclear stocks. Oklo Inc. (NYSE: OKLO) could take a big chunk of this opportunity with its innovative small modular reactors, designed specifically with AI data centers in mind. Here's the thing: Oklo's market cap is just $11 billion -- nearly 90% smaller than Ripple's.

If you want to expose your portfolio to this high-risk, high-reward stock, there are two things to understand before jumping in.

2 factors to consider before investing in Oklo Inc.

Oklo was founded in 2013. Sam Altman -- the CEO of OpenAI, the creator of ChatGPT -- got involved in the company early through a start-up incubator program. In 2015, he personally invested in the company and became its chairman, a post he would keep for the next decade.

Understanding why Altman got involved is critical for understanding Oklo's growth potential. Right now, data centers are being built at a rapid pace globally. One of the main scaling challenges, however, is access to reliable, clean energy. The current electricity grid simply isn't designed to handle the rapidly growing number of energy-intensive data centers the AI industry needs to continue its breakneck growth rates.

Conventional nuclear plants are a great solution for addressing this energy need. But these large plants can take a decade or more to design, permit, and construct. Upfront costs can be high, and the ability to enlarge the plant after construction can be limited.

The AI and data center industries will need more power a decade from now. But they also need more power now. The small modular reactors that Oklo designs can be built faster and more cheaply than conventional nuclear power plants, with the ability to scale in the future.

Image source: Getty Images.

Oklo has a clear path for long-term growth. But there's one other thing to understand about this growth potential -- it will be a long journey. Oklo just received a critical approval for its Aurora SMR from the Nuclear Regulatory Commission, but more permits and approvals will be required for its long-term growth potential to be realized. Critically, research from Bank of America doesn't see SMR adoption taking off in any meaningful way until 2030 or 2035.

Like Ripple, Oklo is chasing a multi-trillion-dollar opportunity. As with Ripple, however, the journey toward capturing this opportunity will take years, if not decades. However, Oklo's relatively small market cap compared to Ripple's should make it attractive for aggressive growth investors.

Bank of America is an advertising partner of Motley Fool Money. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.