This Newly Public Nuclear IPO Is Already Using AI to Speed Up Reactor Design. Is It a Buy?

X-Energy (NASDAQ: XE) has only been public since April, but it's already strategically placed at the intersection of two of the biggest investment themes in the market: artificial intelligence and nuclear power. In July, the company became a founding member of Project Prometheus, an initiative led by Idaho National Laboratory, Nvidia (NASDAQ: NVDA), and Amazon (NASDAQ: AMZN). The program received $60 million through the Department of Energy, while X-Energy is contributing $10 million of its own capital along with proprietary reactor and nuclear fuel data.

The goal is to integrate advanced AI models into everything from reactor design and regulatory documentation to manufacturing, construction, fuel fabrication, and eventually semi-autonomous operations. For a nuclear company, that's potentially a big deal.

Nuclear's biggest problem isn't demand

X-Energy's primary reactor is the Xe-100, an 80-megawatt small modular reactor. And the company already has serious customers.

Dow Inc. (NYSE: DOW) is working with X-Energy on a four-reactor project at its Seadrift manufacturing site in Texas. Amazon is backing another project with Energy Northwest and has an agreement with X-Energy that could ultimately support more than 5 gigawatts by 2039. And British energy giant Centrica is working with X-Energy on potential projects in the U.K.

Altogether, X-Energy says its project pipeline consists of 144 reactors representing approximately 11.5 gigawatts of potential capacity. The primary obstacle now, of course, is getting those reactors built. Nuclear projects have historically suffered from long development timelines, expensive engineering work, and construction delays. But that's where AI could actually matter.

Image source: Getty Images.

X-Energy is already using its AI platform across engineering, licensing, and operations. Project Prometheus could expand those capabilities by using AI to speed up design iterations, produce regulatory documentation, and optimize fuel fabrication. Essentially, if AI can shave meaningful time and expense from those processes, it could improve the economics of X-Energy's pipeline.

But X-Energy isn't just developing reactors. It's also building the fuel infrastructure needed to run them.

The company's TRISO-X subsidiary is constructing the TX-1 fuel fabrication facility in Oak Ridge, Tennessee, which is expected to become the first commercial U.S. facility dedicated to producing TRISO fuel for advanced reactors. Once operational, TX-1 is expected to produce enough fuel to supply as many as 11 Xe-100 reactors.

The financial picture is unusual

X-Energy isn't profitable, and you shouldn't confuse its current revenue with revenue from selling commercial reactors. Q2 revenue and grant income reached $54.6 million, up 154% year over year. But much of that growth came from engineering work and government-supported development activities related to advancing the Xe-100.

Fortunately, X-Energy has plenty of capital. By the end of June, the company reported $1.9 billion in total liquidity and no debt.

Is X-Energy stock a buy?

X-Energy has several things working in its favor, and the AI angle makes the stock particularly unique because X-Energy could benefit from AI in two ways. AI data centers are driving demand, while AI could also help X-Energy develop and deploy the reactors needed to meet it.

But there's still a huge gap between having an 11.5-gigawatt pipeline and operating 11.5 gigawatts of commercial reactors. Licensing, construction, financing, supply chain execution, and customer commitments all have to fall into place. That's why I'd view X-Energy as a high-risk nuclear growth stock rather than a conventional energy investment.

Jeff Siegel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.