NuScale vs. Oklo vs. GE Vernova: Ranking 3 Nuclear Stocks By Backlog, Not Hype.

There is growing hype for nuclear energy stocks. The thesis is simple: Providers of artificial intelligence (AI) are investing aggressively to build data centers.

It's one of the biggest building booms in recent history. Data centers are energy-intensive, and because demand in many parts of the world has flatlined in recent years, current grid infrastructure isn't suited to handle a multiyear ramp-up in demand.

With more generation capacity needed, nuclear looks like an ideal solution. According to research by Goldman Sachs: "Nuclear power will be a key part of a suite of new energy infrastructure built to meet surging data-center power demand driven by artificial intelligence. In the U.S. alone, big tech companies have signed new contracts for more than 10 GW of possible new nuclear capacity in the last year, and Goldman Sachs Research sees potential for three plants to be brought on line by 2030."

Nuclear power is an ideal solution, given that it can deliver a huge amount of reliable, low-carbon electricity. But there's a problem: Nuclear power plants often cost billions of dollars to build, with construction sometimes stretching for a decade or more. AI companies need new power sources fast, and they want to avoid diverting capital away from building more computing infrastructure.

Experts increasingly view small modular reactors, or SMRs, as solutions to this challenge. Bank of America says, "[N]ew advancements in technology may now make the tipping point in sight for small modular reactors to reshape nuclear energy supply chains over the next decade." The bank sees five major advantages for SMRs: lower up-front costs, improved safety, lower carbon emissions, smaller footprints, and the ability to modularize.

Want to gain exposure to SMRs? Dozens of companies are pursuing the technology worldwide, but most are either privately held or part of a larger, more diversified conglomerate. Fortunately, three stocks with meaningful SMR exposure are currently publicly traded.

1. Oklo

Oklo (NYSE: OKLO) is betting that AI providers will want to control their means of energy production. The company intends to finance and construct their own plants near data center infrastructure, selling the energy production to AI companies through long-term power purchase agreements.

At the close of last year, Oklo's project backlog totaled 18.1 gigawatts. But 12 gigawatts of that total deal are with a single customer whose deal is largely nonbinding. Many of the company's other deals are also nonbinding, though a few have included milestone prepayments.

Oklo is directly backed by OpenAI founder Sam Altman and is an ideal pick for investors looking to bet directly on AI companies investing in SMR technology.

2. NuScale Power

NuScale Power (NYSE: SMR) is taking a different approach to selling its SMR systems than Oklo is. Instead of selling directly to AI companies, it is taking a more traditional approach by selling to utility companies. This way, AI companies buy their power through the grid in a conventional manner, with utilities handling the power production.

NuScale's backlog totals between 6 gigawatts and 7 gigawatts. But nearly all of that relates to a single utility customer in the eastern U.S. If built, that SMR system would become the biggest in the world.

As with Oklo, NuScale's backlog is largely nonbinding, leaving significant cancellation risk. But for those looking to invest in SMR technologies without reinventing the energy-delivery status quo, NuScale has the edge.

Image source: Getty Images

3. GE Vernova

GE Vernova (NYSE: GEV) isn't as focused on SMRs as Oklo or NuScale are. The technology currently accounts for less than 3% of the company's sales. But as adoption heats up, SMRs could quickly become a meaningful contributor to sales. That's especially true given the quality of GE Vernova's backlog.

Construction of the company's 1.2-gigawatt SMR system in Darlington, Ontario, has already begun. Meanwhile, its 300-megawatt project in Tennessee received clearance for construction earlier this week.

GE Vernova has the highest quality backlog on this list. Its SMR exposure, however, is the weakest. Investors must weigh the importance of exposure against proven market traction.

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 GE Vernova. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.