Here's Why NuScale Power Stock Is a Buy Before Earnings on May 7

If you've been eyeing nuclear stocks like NuScale Power (NYSE: SMR), now may be the time to buy. So far this year, shares have shed nearly one-third of their value, making the stock much cheaper than it was just a few months ago.

NuScale Power's next earnings announcement is expected to be held on May 7. There's one obvious reason you should buy shares of this nuclear stock before that day, and it's not what you think.

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NuScale Power is chasing a $10 trillion opportunity

NuScale Power specializes in small modular reactors, or SMRs. SMRs are essentially smaller versions of conventional nuclear power plants. This small package allows for several advantages. SMRs have smaller footprints, shorter construction times, and lower initial costs. They can also be modular -- meaning customers have the ability to add to the system's generation capacity over time -- with the ability to be located in remote or areas that are otherwise difficult to access. And at least on paper, they can have improved safety metrics.

Many experts believe that SMRs will play a key role in the world's energy future thanks to the rising energy demands of the artificial intelligence (AI) industry. For the most part, AI technology requires data centers to function. Data centers, however, are currently very energy intensive. With $7 trillion expected to be spent on new data center construction over the next three or four years, we'll need a lot of new energy generation capacity to come online quickly.

This is where SMRs could fit in. Conventional nuclear power plants can be cheaper on a per-watt basis once in operation. But many large-scale nuclear power plants have taken more than a decade to build, plus many billions of dollars. In theory, NuScale Power's SMRs could be brought online much faster, with lower initial costs, making them a cleaner near-term fit for meeting rising energy demand.

In total, Bank of America believes more than $10 trillion may be spent on building new nuclear systems over the next few decades, with SMRs playing a minor but meaningful part in that opportunity. It's still early -- as of 2024, only two SMRs were in operation globally. But right now, there are over 80 commercial SMR designs being developed that could see commercial units built and put into operation over the next decade. NuScale Power hopes to get its first designs online in a real-world setting by 2030, though further delays are possible.

One reason NuScale Power stock is a buy right now

Buying into SMR stocks like NuScale Power is a long-term game. This thesis will play out over decades, not a handful of quarters. Then why might it be a good idea to buy shares before the next quarterly earnings call on May 7? In my book, there's one obvious reason: to get skin in the game.

Any quarter now, we could receive a game-changing update from NuScale Power. Perhaps a new major client will be signed, or construction will begin on an existing deal already in the company's pipeline. Conversely, we may get bad news, like a construction or permitting delay. Either way, the stock price could swing dramatically at a moment's notice.

This is the thing about stocks with huge upside potential and stories that will last decades: No one knows the right time to go all in. There will be plenty of volatility along the way, full of huge upwards swings followed by deep sell-offs that generate temporary buying opportunities. Dipping your toes in now gets you in the game, giving you options no matter where the stock price heads over the short term.

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