X-Energy vs. GE Vernova: Is the New IPO the Better Buy?

Growing power demands from artificial intelligence (AI) data centers have thrust energy stocks into the spotlight. Once a sleepy corner of the market known for its modest growth, energy has become a top focus for technology companies, creating opportunities for investors.

Data center operators are rushing to secure power wherever they can, a powerful tailwind for GE Vernova's (NYSE: GEV) gas turbine equipment. But in the longer term, hyperscalers are looking toward nuclear energy and advanced small modular reactors (SMRs).

X-Energy (NASDAQ: XE), which made its initial public offering (IPO) in April, and GE Vernova both develop SMRs, which promise to make nuclear energy modular, scalable, and safer than traditional large nuclear power plants.

With GE Vernova as a more mature megacap industrial leader, investors may be wondering whether X-Energy offers more upside from here. Let's compare the two companies to find out.

GE Vernova and X-Energy both develop small modular nuclear reactors

GE Vernova is seeing incredible demand for its gas-powered turbines from utilities and data center operators. Fueled by natural gas, these turbines are seen as a bridge power solution for companies looking to meet their energy needs today. At the end of the second quarter, GE Vernova has 116 gigawatts (GW) of capacity under contract and a $176 billion backlog.

Gas turbines have driven much of GE Vernova's recent growth. But the company offers power solutions beyond gas, including a light-water small modular reactor (SMR), the BWRX-300, which its subsidiary manufactures in partnership with Hitachi. Its SMR is a boiling-water nuclear reactor that uses low-enriched uranium (LEU), which is commonly used in traditional reactors.

X-Energy is developing its own SMR, the Xe-100, which uses helium gas for cooling instead of water. By using helium gas, the Xe-100 can reach temperatures up to 750 degrees celcius, making it useful for industrial processes such as hydrogen production, chemical manufacturing, and desalination. In addition, the Xe-100 uses tri-structural isotropic (TRISO) pebbles for fuel, which have been called "the most robust nuclear fuel on Earth" by the U.S. Department of Energy.

Which stock is right for you?

GE Vernova and X-Energy are both working on SMR nuclear technology, but they are at very different stages in their lifecycles.

GE Vernova is a mature industrial leader with a massive global reach and a market capitalization of $250 billion. For more conservative investors seeking exposure to a company that can meet AI power demands today and still offer upside from its nuclear technology in the 2030s, GE Vernova is the better buy.

X-Energy is still in its very early stages. It aims to complete construction and installation at its TX-1 fuel facility next year and begin commercial fuel fabrication by 2028. The nuclear company is also targeting the 2030s for deploying its Xe-100 SMRs to customers such as Dow Chemical and Amazon.

For these reasons, X-Energy is a highly speculative, volatile small-cap stock with more to prove over the next few years. But it also offers more explosive upside potential if it succeeds.

Courtney Carlsen has positions in GE Vernova. The Motley Fool has positions in and recommends Amazon and GE Vernova. The Motley Fool recommends Hitachi. The Motley Fool has a disclosure policy.