Oklo Vs. X-Energy: Is the New Nuclear IPO the Better Buy?

Sometimes it's good to be the hot new stock in an industry ripe for disruption. And that's exactly what Oklo (NYSE: OKLO) was when it went public in May 2024 through a SPAC (special purpose acquisition company) merger. The small modular reactor (SMR) company had a compelling plan focused on artificial intelligence (AI), support from AI guru Sam Altman, and an incoming nuclear-friendly presidential administration.

But one problem with being the hot new stock is that you eventually become the not-so-new stock, leaving room for another company to assume that role.

That's exactly what happened in April when X-Energy (NASDAQ: XE) went public. This new SMR company has a compelling AI-focused plan, support from AI hyperscaler Amazon (NASDAQ: AMZN), and a nuclear-friendly presidential administration. Wait a minute... this sounds familiar!

So, which of these next-generation nuclear stocks looks like a better buy?

Image source: Getty Images.

How they're different

SMR company NuScale Energy (NYSE: SMR) is developing an SMR that's essentially a smaller version of the standard water-cooled system found in almost all existing U.S. nuclear power plants. But Oklo and X-Energy's SMR designs differ from NuScale's in fundamental ways.

Oklo's Aurora Powerhouse design is based on a small-scale fast reactor cooled by liquid sodium instead of water. Because liquid sodium has a very high boiling point, the system can operate at higher temperatures and lower pressures than a water-cooled reactor, which in theory makes it more efficient. The "fast" part of the "fast reactor" maintains fission without slowing down neutrons, allowing the reactor to be fueled with spent fuel from existing reactors.

X-Energy's XE-100 SMR is a high-temperature reactor cooled by pressurized helium gas, which is then pumped into a separate water loop to heat the water into steam and power steam turbines. As an inert element, helium provides extra insurance that no radiation is transferred into the water system. If the XE-100's core temperatures rise, its design uses the inherent physics of matter expansion and neutron interaction to slow the reaction rate without human intervention, providing an additional safety measure against a meltdown.

How they're similar

Perhaps the biggest similarity between Oklo's and X-Energy's designs is that neither has been built yet. While each company has received some preliminary support from the U.S. Department of Energy (DOE) under the Trump administration, neither reactor design has been approved for commercial deployment by the U.S. Nuclear Regulatory Commission (NRC).

Oklo is currently building its first Aurora Powerhouse on the grounds of the DOE's Idaho National Laboratory. It expects to bring that reactor to criticality around Q1 2027. Meanwhile, X-Energy has partnered with the DOE and Dow Chemical (NYSE: DOW) to build the first four XE-100 reactors at a Dow facility in Texas and use them for both power generation and industrial steam production. However, the regulatory review of its application is ongoing, so construction isn't likely to begin until at least Q1 2027.

Both companies also have nuclear fuel businesses that they expect to contribute to their bottom lines. X-Energy will manufacture a type of ceramic-coated pelleted uranium fuel called TRISO, which is safer to use than standard uranium fuel, while Oklo has several fuel operations in the works, including working with surplus plutonium from government sources, recycling nuclear fuel, and creating nuclear isotopes for industrial and healthcare use.

The better buy

Because both companies are pre-commercial, their current financials tell us little about how their respective businesses will perform once they receive commercial approval from the NRC. And that's even assuming they do ultimately receive such approval, which isn't guaranteed. A critical design flaw could manifest in one or both designs, scuttling that company's ambitions and sinking its stock. Nobody, not even risk-tolerant investors, should invest money in either company that they can't afford to lose.

Even if both companies' plans proceed smoothly, investors buying in now are signing up for a long wait. That said, because Oklo appears to be a bit further along in its process, it looks like the better buy of these two highly speculative companies.

John Bromels has positions in Amazon, Dow, and Oklo. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.