NuScale Power Stock Jumps 15% in 1 Day. Here's How Nuclear Energy Investors Should Respond.

NuScale Power (NYSE: SMR) stock surged more than 15% in a single trading day last week. What caused the price spike? It's difficult to tell. The company didn't make any major announcements, nor did any Wall Street analysts issue new reports. The valuation jump may simply have been renewed interest in small modular reactor (SMR) developers, as SMR peer Oklo (NYSE: OKLO) also saw its stock price pop by 7%.

Notably, the uptick for SMR stocks occurred after a long stretch of declines. Even after the rebound, NuScale stock remains down 28% this year, with Oklo shares down roughly 44%.

Are SMR stocks like NuScale now poised for a more meaningful rebound? There's a good argument to be bullish on the sector as a whole. But NuScale has a specific catalyst working in its favor that could add significant momentum to the nuclear stock's share price by the end of 2026.

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SMR stocks may be rebounding from increased AI capex expectations

There was no obvious reason for NuScale's stock to spike. But that doesn't mean that there aren't potential growth tailwinds that the market is only now starting to price in.

Before jumping in, investors should first understand what makes NuScale so attractive as a business right now. The concept of small modular reactors, or SMRs, has been around for decades. Yet throughout history, only two SMR systems have ever been built.

Why are these miniature power plants so rare? The primary reason is cost. On a per-megawatt basis, building larger nuclear power plants is cheaper. SMRs can be built faster with lower upfront costs, but historically, speed and initial financing haven't been huge priorities. Electricity demand in the U.S. typically grew predictably, and throughout much of the early 2000s, it didn't grow at all. Nuclear developers, therefore, focused most on lowering long-term costs. That meant building conventionally sized nuclear power facilities.

That historical paradigm is now behind us. The rapid rise of artificial intelligence (AI) is driving a significant increase in energy demand, a trend that should persist for decades to come. AI companies are racing to stay competitive. That means building data center infrastructure as quickly as possible. The grid, however, isn't designed to meet this sudden and sizable surge in energy demand. New energy sources are needed quickly. It is this shift that has suddenly placed the spotlight on SMR developers such as NuScale and Oklo.

NuScale has already lined up a list of potential customers, including a 6-gigawatt deal with the Tennessee Valley Authority. If built, that system would be the largest in the world. Oklo, too, has an impressive customer pipeline. Importantly, however, none of these projects has moved fully into construction and commercialization. The weakness in SMR stock prices this year is likely due to growing skepticism about real-world adoption of SMR.

These fears received some critical pushback last week, however. On Sept. 3, OpenAI announced that its new model would enable artificial general intelligence, or AGI. After the announcement, I argued that this could raise expectations for AI capex to surge even higher than previous estimates, as AI companies rush to remain competitive.

This positive tailwind arrives just as NuScale approaches a major catalyst: the signing of a power purchase agreement (PPA) for its 6-gigawatt SMR system in the eastern U.S. Rising capex from AI companies would likely boost the odds of mass SMR adoption. The signing of a PPA, however, would commit the utility customer to buying power from the project for years to come. There could be no greater signal for potential adoption than that. NuScale's CFO hopes to sign a PPA by the end of the year, which could be a major catalyst for both NuScale stock and the SMR industry as a whole.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.